Part 1.
TEXAS NATURAL RESOURCE CONSERVATION COMMISSION
Chapter 17.
TAX RELIEF FOR PROPERTY USED FOR ENVIRONMENTAL PROTECTION
30 TAC §§17.2, 17.4, 17.10, 17.12, 17.15, 17.17, 17.20, 17.25
The Texas Natural Resource Conservation Commission (TNRCC
or commission) adopts the amendments to §17.2, Definitions; §17.4,
Applicability; §17.10, Application for Use Determination; §17.12,
Application Review Schedule; and §17.20, Application Fees. The commission
also adopts new §17.15, Review Standards; §17.17, Partial Determinations;
and §17.25, Appeals Process.
Sections 17.2, 17.12, 17.15, 17.17 and 17.25 are adopted
with changes
to the proposed text as published in the September 28,
2001, issue of the
Texas Register
(26 TexReg
7420) and will be republished. Sections 17.4, 17.10, and 17.20 are adopted
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES
The program for providing tax relief for pollution control property was
established under a constitutional amendment listed as Proposition 2 on the
state ballot on November 2, 1993. This amendment added §1-l to the Texas
Constitution, Article VIII, which provides, in part, that "{t}he legislature
by general law may exempt from ad valorem taxation all or part of real and
personal property used, constructed, acquired, or installed wholly or partly
to meet or exceed rules or regulations adopted by any environmental protection
agency...for the prevention, monitoring, control or reduction of air, water,
or land pollution." The 73rd Legislature added §11.31, Pollution Control
Property, to Texas Tax Code (TTC), Chapter 11 and §26.045 to TTC, Chapter
26 to implement the new constitutional provision. In accordance with TTC, §11.31,
obtaining a tax exemption for pollution control property is a two-step process.
First, the person seeking the exemption must obtain a positive determination
from the commission that the property is used wholly or partially for pollution
control (i.e., to meet or exceed environmental regulatory requirements). Second,
once a person obtains a positive determination, it then applies to the local
appraisal district, which completes the second step by granting the tax exemption.
The commission adopted Chapter 277 of its regulations on September 30,
1994, to establish the procedures for obtaining a use determination for pollution
control property under Proposition 2. In 1998, Chapter 277 was changed to
Chapter 17 to be consistent with the commission's policy to place general
or multimedia rules within the Chapter 1--100 series of the commission's rules
in Title 30 of the Texas Administrative Code (TAC).
In 2000, program staff assembled a workgroup consisting of representatives
of industry, appraisal districts, taxing authorities, and consumer and environmental
groups to discuss potential changes to the program guidelines manual, which
describes procedures for processing use determination applications, including
applications for property that is used only partially for pollution control.
Potential changes developed in meetings with the workgroup were discussed
with the commission at a work session in November 2000. Based on guidance
provided at that work session, in January 2001, a number of changes were made
to the procedures set out in the program guidelines document for processing
use determination applications. These changes include revision of the standards
used for determining if property qualifies as pollution control property,
the establishment of a cost analysis procedure for calculating partial determinations,
and the development of several definitions as discussed in the SECTION BY
SECTION DISCUSSION. The program guidelines document, as revised, forms the
basis for this rulemaking in the implementation of House Bill (HB) 3121, enacted
by the 77th Legislature, 2001.
House Bill 3121 amended TTC, §11.31 in several respects. First, HB
3121 requires that the commission adopt specific standards for considering
applications to ensure that use determinations, including partial determinations,
are equal and uniform. Second, HB 3121 creates an appeals process for a person
seeking a use determination from the executive director (ED), or for the chief
appraiser of the appraisal district for the county in which the property is
located. Third, HB 3121 requires the commission's ED to provide a copy of
the use determination to the chief appraiser of the appraisal district for
the county in which the property is located.
The adopted amendments to Chapter 17 and the adopted new sections in Chapter
17 will implement the requirements of HB 3121. In addition, the adopted change
to §17.20 will raise the Tier I application fee from $50 to $150. This
fee increase is necessary for the commission to continue to recover its operating
costs to run the use determination program. There is a variable mix of Tier
I, Tier II, and Tier III applications from year-to-year and the total revenue
generated by the program for the last two years has been insufficient to meet
budgetary requirements. Since the program is required to be self-funded in
accordance with TTC, §11.31, fees must be increased. The vast majority
of applications submitted each year are Tier I. Also, the complexity of Tier
I applications has increased over the last several years, requiring increased
staff time to review them. It is appropriate, therefore, to increase the Tier
I fee in order to recoup a higher percentage of the operating costs attributable
to processing those applications.
SECTION BY SECTION DISCUSSION
The adopted changes to §17.2 include the addition of language to clarify
that terms used in this chapter are also used in the field of property taxation,
not just pollution control; and the addition of the following term definitions:
byproduct, capital cost new, capital cost old, cost analysis procedure, decision
flow chart, partial determination, production capacity factor, Tier I, Tier
II, and Tier III. These terms are used in new §17.15 and §17.17
and the definitions are needed to explain the cost analysis procedure. In
response to comments, §17.2(10) and §17.2(14) have been changed
from the proposed language and §17.2(15) has been added. Section 17.2(10)
has been changed to reflect that new property receives the same treatment
as replacement property and §17.2(14) has been changed to explain that
a use determination includes the percentage of the property that is considered
to be pollution control property. New §17.2(15) has been added to define
"use determination letter."
The adopted changes to §17.4 will correct a grammatical error and
add a requirement for the ED to follow the standards established within this
chapter in making a final use determination on pollution control property.
The adopted change to §17.10 will add a requirement that for property
which is not used wholly for pollution control purposes, the cost analysis
procedure listed in §17.17 must be followed and the calculation must
be shown in the application and that the Decision Flow Chart, §17.15,
must be included in the application.
The adopted change to §17.12 will add a requirement that the ED provide
a copy of the final use determination to the appraisal district where the
property is located. The final use determination contains a description of
the pollution control property for which a use determination was requested.
In response to a comment, §17.12(3)(C) has been changed to clarify that
a copy of the use determination will be enclosed with the letter to be mailed
to the appropriate appraisal district.
Adopted new §17.15 describes the review standards to be used in determining
the pollution control property status of each property item for which a use
determination is requested. A decision flow chart is provided to determine
whether a particular property item qualifies as pollution control property
and whether it qualifies as pollution control equipment under the Tier I,
Tier II, or Tier III fee structure. Tier I property is property which is included
on the predetermined equipment list (PEL). The PEL is a list of property that
the ED has determined is either wholly or partially for pollution control
purposes. Tier II property is that property which is 100% pollution control
property but is not contained on the PEL. Tier III property is partially for
pollution control and partially for process or product improvement and is
therefore only eligible for a partial pollution control property use determination.
In response to a comment, the phrase "process change" has been changed to
"process." This was done to reflect that a new process will receive the same
consideration as a replacement process.
Adopted new §17.17 describes the required calculation procedure for
a Tier III partial pollution control property use determination. This procedure
is followed for applications that are partially for pollution control and
partially for process or product improvement and thereby do not qualify as
100% pollution control property. In response to a comment, footnotes 1 and
3.2 (Figure: 30 TAC §17.17(b)) were changed to allow for the adjustment
of capital cost old in cases where the production capacity of the replacement
property is lower than the capacity of the replaced property.
The adopted change to §17.20 will raise the Tier I application fee
from $50 to $150. This fee increase is necessary for the commission to continue
to recover its operating costs to run the use determination program.
Adopted new §17.25 will describe the procedures for appealing a use
determination made by the ED. This section allows an appeal by only the use
determination applicant or the chief appraiser of the appraisal district for
the county in which the property is located. Section 17.25 also describes
the procedures followed by the TNRCC chief clerk to process the appeal, possible
actions by the commission after hearing the appeal, and required action by
the ED if the determination is remanded to the ED by the commission. Section
17.25(b) has been clarified to state that the ED's use determination shall
be final if a proper appeal is not timely filed. Further, §17.25(d)(3)
has been added to clarify that the commission's decision to deny an appeal
and uphold the ED's use determination shall constitute the agency action which
is final and appealable.
FINAL REGULATORY IMPACT ANALYSIS DETERMINATION
The commission has determined that this rulemaking is not subject to Texas
Government Code, §2001.0225, because it does not meet the definition
of a "major environmental rule" as defined in that statute. Furthermore, it
does not meet any of the four applicability requirements listed in §2001.0225(a).
"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, productivity,
competition, jobs, the environment, or the public health and safety of the
state or a sector of the state. The adopted rulemaking does not meet the definition
of "major environmental rule" because the specific intent of the rulemaking
is procedural in nature. The rulemaking revises procedures for providing notice
to the chief appraiser of the county in which the property is located, adds
procedures and definitions contained in the program guidelines manual as revised,
for determining whether property is used for the control of air pollution,
adds procedures describing how certain persons may appeal a decision by the
ED, and increases the fee for a Tier 1 application.
In addition, even if the adopted rule is a major environmental rule, a
draft regulatory impact assessment is not required because the rules do not
exceed a standard set by federal law, exceed an express requirement of state
law, exceed a requirement of a delegation agreement, or propose to adopt a
rule solely under the general powers of the agency. The rules do not exceed
a standard set by federal law. The adopted rules do not exceed an express
requirement of state law because they are authorized by the following state
statutes: Texas Government Code, §2001.004, which requires state agencies
to adopt rules of practice stating the nature and requirements of all available
formal and informal state agency procedures; and TTC, §11.31, which authorizes
the ED to determine if property is used for the control of air pollution,
as well as the other statutory authorities cited in the STATUTORY AUTHORITY
analysis of this preamble. In addition, this rulemaking is in direct response
to HB 3121, and does not exceed any of the requirements of this bill, nor
does it exceed the requirements of the Texas Constitution, Article VIII, §1-l.
This rulemaking does not adopt a rule solely under the general powers of the
agency, but rather under a specific state laws (i.e., TTC, Chapter 11, Subchapter
B (Exemptions); and Texas Government Code, §2001.004). Finally, this
rulemaking is not being adopted on an emergency basis to protect the environment
or to reduce risks to human health from environmental exposure.
TAKINGS IMPACT ASSESSMENT
The commission determined that the adopted rules are not subject to Texas
Government Code, Chapter 2007. The specific primary purpose of the rulemaking
is to revise commission rules relating to procedures for processing use determinations
applications requesting a determination of whether certain property qualifies
as pollution control property as required by HB 3121. As amended by HB 3121,
TTC, §11.31(d) requires the ED to provide a copy of a use determination
to the appraisal district, §11.31(e) allows appeal by the applicant or
the appraisal district to the commission of a use determination by the ED,
and §11.31(g) requires the commission to establish specific standards
to be followed for considering use determination applications. These new requirements
and other revisions to §11.31 are described in the BACKGROUND AND SUMMARY
OF THE FACTUAL BASIS FOR THE ADOPTED RULES and SECTION BY SECTION DISCUSSION
portions of this rulemaking. The adopted rule revisions and new sections do
not substantively change the program requirements that are already in place.
The adopted rules will substantially advance the stated purpose by providing
specific procedural requirements for processing use determination applications.
Promulgation and enforcement of these rules will not burden private real property.
The adopted rule revisions and new sections do not affect private property
in a manner which restricts or limits an owner's right to the property that
would otherwise exist in the absence of governmental action. Consequently,
these adopted rule revisions and new sections do not meet the definition of
a taking under Texas Government Code, §2007.002(5).
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission has determined that the adopted rulemaking does not relate
to an action or actions subject to the Texas Coastal Management Program (CMP)
in accordance with the Coastal Coordination Management Act of 1991, as amended
(Texas Natural Resources Code, §§33.201
et seq.
) and the commission's rules in 30 TAC Chapter 281, Subchapter
B, concerning Consistency with the Texas Coastal Management Program. The rules
do not govern air pollutant emissions, on-site sewage disposal systems, or
underground storage tanks. The rulemaking revises procedures for providing
notice to the chief appraiser of the county in which the property is located,
adds procedures and definitions contained in the program guidelines manual
as revised, for determining whether property is used for the control of air
pollution, adds procedures describing how certain persons may appeal a decision
by the ED, and increases the fee for a Tier 1 application. These actions concern
only the procedural rules of the commission, are not substantive in nature,
do not govern or authorize any actions subject to the CMP, and are not themselves
capable of adversely affecting a coastal natural resource area (Title 31 Natural
Resources and Conservation Code, Chapter 505; 30 TAC §§281.40,
HEARING AND COMMENTERS
The commission held a public hearing in Austin on October 23, 2001. The
public comment period closed on October 29, 2001. One commenter provided oral
comments at the public hearing and also submitted written comments. In addition,
three commenters provided written comments only.
The commenters were: Texas Center for Policy Studies (TCPS), which presented
oral and written comments endorsed by Clean Water Action, Environmental Defense's
Texas Office, Public Citizen's Texas Office, Lone Star Chapter of the Sierra
Club, the Sustainable Energy and Economic Development Coalition, Consumer's
Union, Texas Campaign for the Environment, League of Conservation Voters,
and the Center for Public Policy Priorities. Commenters submitting written
comments only were Association of Texas Intrastate Natural Gas Pipelines (ATINGP);
Texas Taxpayers And Research Association (TTARA); and Ryan Valuation Services
(RVS).
Analysis of Comments
TCPS stated that it only had two brief additions to the proposed rules.
First, TCPS suggested that the phrase "use determination letter" should be
defined or, alternatively, that additional explanation be provided in §17.12(3)(C)
regarding the contents of use determination letter. Specifically, TCPS suggested
that the use determination letter contain a description of the property or
device, its calculated value, the pollution control percentage, and for Tier
III applications a copy of the Cost Analysis Procedure (CAP) worksheet. Second,
TCPS urged that the Predetermined Equipment List (PEL) should be reviewed
and updated at least once a year with public input.
Response
In response to TCPS's first comment, the ED's decision on a use determination
application is reflected in the use determination itself rather than the letter
that is used to transmit it to the chief appraiser of the appraisal district
for the county in which the property is located. In order to better clarify
the definition of a "use determination," §17.2(14) has been amended to
state that a use determination includes the percent of the property which
is determined to qualify as pollution control property. The term "use determination
letter" has been defined to include the use determination and the name of
the company, the name and location of the facility, and the property description.
In addition, for Tier III applications a copy of the Cost Analysis Procedure
worksheet will be enclosed. For Tier II and Tier I applications a copy of
the program staff's technical review document will be enclosed. The calculated
value of the property or device is not contained in the use determination
or the use determination letter because calculating the value of the property
or device is the responsibility of the appraisal district. TNRCC's responsibility
is to determine if the property qualifies as pollution control property and
if the property is used only partly as pollution control property to determine
the percentage of the property used for pollution control.
Second, TCPS commented that language either should be added to the definition
of PEL in §17.2(7) or in §17.4 to require that the PEL be reviewed
and updated, with public input, on an annual basis.
Response
The commission agrees that the items on the PEL should be periodically
reviewed. Program staff is currently in the process of conducting a comprehensive
review of the PEL with input from the workgroup. Staff expects to complete
this review of the entire list by December 2002. Upon completion of this review,
staff will draft a policy for reviewing the PEL for presentation to the commission
that will address whether the PEL should be reviewed on an annual basis and
how to solicit and incorporate public input into the process. No changes have
been made in response to this comment.
ATINGP commented that while the association generally supports the proposed
rules, it has some concern about the appeals process. The proposed rules do
not identify the point in time at which the ED's determination is considered
to be a final administrative action of the agency. ATINGP recommended that §17.25(b)
be amended to provide that in the event an appeal is not timely filed, the
ED's determination letter is deemed to be the final action of the agency upon
expiration of the 20-day period of appeal; and that §17.25(d)(2) be amended
to provide that in the event that the commission denies the appeal and affirms
the ED's use determination that the ED's determination letter becomes the
final administrative action of the agency on the date the commission issues
its order denying the appeal.
Response
The commission agrees that §17.25 does not specifically identify the
point in time at which the ED's determination is deemed a final administrative
action of the agency. Section 17.25(b) has been clarified to state that the
ED's use determination shall be final if a proper appeal is not timely filed.
Further, §17.25(d)(3) has been added to clarify that the commission's
decision to deny an appeal and uphold the ED's use determination shall constitute
the agency action which is final and appealable.
TTARA commented on two issues. First, TTARA commented that the proposed
rule fails to reflect the Attorney General's (AG) April 27, 2001 Opinion No.
JC-0372, concerning the application of the pollution control equipment as
it relates to new versus existing sites. TTARA commented that the definition
of "Production Capacity Factor" in §17.2(10) refers to the original property
or process, implying that a new facility may not qualify since there is no
original property or process and that §17.15 refers to a process change
when a new facility has a new process, not a changed one. TTARA recommended
the following three actions: first, amend §17.2(10) to read: "Production
Capacity Factor A calculated value used to adjust the value of a partial use
determination to reflect capacity considerations"; second, change all references
to "process change" to "process"; and third, add a statement to the rules
that stating that all pollution control equipment, whether used in a new or
existing facility is eligible for a pollution control exemption.
Response
The commission agrees with the first two suggestions. The proposed definition
of Production Capacity Factor and the use of the phrase "process change" do
appear to be in conflict with the Attorney General's opinion and §17.2(10)
and §17.15 have been revised in response to these suggestions. Section
17.2(10) has been changed to read: "Production Capacity Factor--A calculated
value used to adjust the value of a partial use determination to reflect capacity
considerations." Section 17.15, as proposed, contained the only usage of the
phrase "process change." The word "change" has been deleted. With these specific
modifications, the adopted rules contain no language that implies that property
installed at a new site will be treated differently than property installed
at an existing site. No changes have been made in response to the third recommendation.
As to TTARA's second issue, it commented that limiting the use of the Production
Capacity Factor (PCF) in the CAP to cases where there is an increase in production
understates the partial percentage for installation of an equipment/process
that has a smaller production capacity than the previous equipment/process.
TTARA recommends that footnote 1 in §17.17(b) be eliminated.
Response
The commission agrees that not adjusting for a decrease in capacity may
result in a reduced use determination. However, the commission disagrees that
the adjustment should be made to Capital Cost New (CCN) by using the PCF.
The more appropriate method for handling a decrease in production capacity
is to adjust Capital Cost Old (CCO) to reflect the lower production capacity.
Footnotes 3.1, 3.2, and 3.3, in §17.17(b) provide three methods for calculating
CCO. The methods described in 3.1 and 3.3 calculate CCO based on CCO being
comparable to CCN. These two methods account for a decrease in production
capacity. The method in footnote 3.2 as proposed did not account for a decrease
in production capacity. Accordingly, footnote 3.2 has been modified to read:
"If the conditions in variable 3.1 of §17.17(b) do not apply and the
company is replacing an existing unit, then the company shall convert the
original cost of the unit to today's dollars by using a published industry
specific standard. If the production capacity of the new equipment or process
is lower than the production capacity of the old equipment or process, then
CCO is divided by the PCF in order to reduce CCO to reflect the same production
capacity as CCN." Adjusting the production capacity of CCO to reflect the
lower production capacity of CCN provides the same benefit as adjusting CCN
to reflect the lower production capacity of CCO.
RVS commented that the CAP assumes that capital cost/capacity relationships
are linear and that the use of this assumption will likely understate the
amount of the exemption to the disadvantage of the taxpayer. RVS commented
that while a PCF is necessary to adjust for size differences between the existing
and replacement equipment, a scale factor or size exponent should be added
as a component since the capital cost of equipment of different capacities
often varies exponentially rather than linearly due to economies of scale.
The proposed scale factor is the "six-tenths factor."
Response
The commission agrees that the relationship between capital cost for equipment
of varying production capacities in some cases is not linear. However, the
commission does not agree that the "six-tenths factor" should be added to
the CAP. Before the CAP was approved by the commission, staff reviewed several
Tier III applications where the "six-tenths factor" was included in the calculation.
In all cases the applicants were unable to justify the use of the scale factor
and it was not included in the final calculation. The CAP was developed by
staff and revised by the workgroup. Several factors, including the "six-tenths
factor" were reviewed for inclusion in the equation. The workgroup decided
not to include a scale factor. The information provided by RVS does not provide
justification for changing the rule. No changes have been made in response
to this comment.
RVS also commented that it disagrees with the method used for determining
the Net Present Value of the Byproduct (BP). RVS provided an alternative method
for calculating byproduct. RVS proposed allowing income tax to be subtracted
from the value of the byproduct to arrive at a truer cash flow number and
that a weighted average cost of capital (WACC) be used as the discount rate
rather than the Prime-Lending Rate (PLR).
Response
The commission does not agree with either of RSV's proposed revisions to
the method used for determining Net Present Value of Byproduct. The byproduct
calculation was developed by staff and revised by the workgroup. Several factors,
including income tax were reviewed for inclusion in the equation. The workgroup
decided that because the CAP was developed to look at capital values operating
expenses and net income were not appropriate items for inclusion.
Further, the commission disagrees that the use of the WACC will provide
a more accurate byproduct value. The PLR was chosen because of its wide availability.
The WACC is not widely available. RVS provided examples to illustrate the
increase in the byproduct value which would occur if its two proposals are
implemented. After removing income taxes from the equation the example using
WACC provides only a 2% increase in byproduct value over the example using
the PLR. No changes have been made in response to this comment.
STATUTORY AUTHORITY
The amendments and new sections are adopted under Texas Water Code (TWC), §5.102,
which authorizes the commission to perform any acts authorized by TWC or other
law which are necessary and convenient to the exercise of its jurisdiction
and powers and §5.103, which authorizes the commission to adopt rules
necessary to carry out its powers and duties under TWC. The amendments and
new sections are also adopted under TTC, §11.31, which authorizes an
exemption from taxation of all or part of real and personal property that
is used wholly or partly as a facility, device, or method for the control
of air, water, or land pollution.
§17.2.Definitions.
Unless specifically defined in the TCAA, the TSWDA, the Texas Water
Code (TWC), or the Texas Health and Safety Code (THSC), or in the rules of
the commission, the terms used by the commission have the meanings commonly
ascribed to them in the fields of pollution control or property taxation.
In addition to the terms which are defined by the TCAA, the TSWDA, TWC, and
THSC, the following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Byproduct--A chemical or material that would normally be
considered a waste material requiring disposal or destruction, but due to
pollution control property is now used as a raw material in a manufacturing
process or as an end product. The pollution control property extracts, recovers,
or processes the waste material so that it can be used in another manufacturing
process or an end product.
(2)
Capital cost new--The estimated total capital cost of the
equipment or process.
(3)
Capital cost old--This is the cost of comparable equipment
or process without the pollution control feature.
(4)
Cost analysis procedure--A procedure which uses cost accounting
principles to calculate the percentage of a project or process that qualifies
for a positive use determination as pollution control property.
(5)
Decision flow chart--A flow chart which is used to determine
if a property or process is eligible for a determination as pollution control
property.
(6)
Installation--The act of establishing, in a designated
place, property that is put into place for use or service.
(7)
Partial Determination--A determination that an item of
property or a process is not used wholly as pollution control. This is property
that is not on the predetermined equipment list (PEL) and that is not used
wholly for pollution control.
(8)
Pollution control property--A facility, device, or method
for control of air, water, or land pollution as defined by Texas Tax Code, §11.31(b).
(9)
Predetermined equipment list--A list of property that the
executive director has determined is either wholly or partially for pollution
control purposes.
(10)
Production capacity factor--A calculated value used to
adjust the value of a partial use determination to reflect capacity considerations.
(11)
Tier I--An application which contains property that is
on the PEL or that is necessary for the installation or operation of property
located on the PEL.
(12)
Tier II--An application for property that is used wholly
for the control of air, water, and/or land pollution, but not on the PEL.
(13)
Tier III--An application for property used partially for
the control of air, water, and/or land pollution.
(14)
Use determination--A finding, either positive or negative,
by the executive director that the property is used wholly or partially for
pollution control purposes and listing the percentage of the property that
is determined to be used for pollution control.
(15)
Use determination letter--The letter sent to the applicant
and the chief appraiser which includes the executive director's use determination.
In addition to the use determination, the letter will also include at least
the following information:
(A)
the name of the applicant;
(B)
the name and location of the facility;
(C)
the property description;
(D)
in the case of a Tier III application, a copy of the Cost
Analysis Procedure worksheet; and
(E)
any other information the executive director deems relevant
to the use determination.
§17.12.Application Review Schedule.
Following submission of the information required by §17.10 of
this title (relating to Application for Use Determination), the executive
director shall determine whether the pollution control property is used wholly
or partly for the control of air, water, or land pollution. If the determination
is that the property is used partly for pollution control, the executive director
shall determine the proportion of the property used for pollution control.
(1)
As soon as practicable, the executive director shall send
notice by regular mail to the chief appraiser of the appraisal district for
the county in which the property is located that the person has applied for
a use determination under this chapter.
(2)
Within 30 days of receipt of an application for use determination,
the executive director shall mail written notification informing the applicant
that the application is administratively complete or that it is deficient.
(A)
If the application is deficient, the notification shall
specify the deficiencies, and allow the applicant 30 days to provide the requested
information. If the applicant does not submit an adequate response, the application
will be sent back to the applicant without further action by the executive
director and the application fee will be forfeited under §17.20(b) of
this title (relating to Application Fees).
(B)
Additional technical information may be requested within
60 days of issuance of an administrative completeness letter. If the applicant
does not provide the requested technical information within 30 days, the application
will be sent back to the applicant without further action by the executive
director and the application fee will be forfeited under §17.20(b) of
this title.
(C)
If an application is sent back to the applicant under subparagraphs
(A) or (B) of this paragraph, the applicant may refile the application and
pay the appropriate fee as required by §17.20 of this title.
(3)
The executive director shall determine whether the property
is used wholly or partly to control pollution. The executive director is authorized
to grant positive use determinations for some or all of the property included
in the application that is deemed pollution control property.
(A)
If a positive use determination is made, the executive
director shall issue a use determination letter to the applicant which describes
the proportion of the property that is pollution control property.
(B)
If a negative use determination is made, the executive
director shall issue a denial letter explaining the reason for the denial.
(C)
A letter enclosing a copy of the use determination shall
be sent by regular mail to the chief appraiser of the appraisal district for
the county in which the property is located.
§17.15.Review Standards.
The Prop 2 Decision Flow Chart shall be used for each item of pollution
control property or process to determine whether the particular equipment
item will qualify as pollution control property. The executive director shall
apply the standards in the Prop 2 Decision Flow Chart when acting on a use
determination application.
Figure: 30 TAC §17.15
§17.17.Partial Determinations.
(a)
A partial determination must be requested for all property
that is not on the predetermined equipment list and that is not wholly used
for pollution control. In order to calculate a partial determination percentage,
the cost analysis procedure described in subsection (b) of this section must
be used.
(b)
The following calculation (cost analysis procedure) must
be used to determine the creditable partial percentage for a property or project
which is not used wholly for pollution control:
Figure: 30 TAC §17.17(b)
(c)
For property that generates a marketable byproduct (BP),
the net present value of the BP is used to reduce the partial determination.
The value of the BP is calculated by subtracting the transportation and storage
of the BP from the market value of the BP. This value is then used to calculate
the net present value (NPV) of the BP over the lifetime of the equipment.
The equation for calculating BP is as follows:
Figure: 30 TAC §17.17(c)
(d)
If the cost analysis procedure produces a negative number
or a zero, the property is not eligible for a positive use determination.
§17.25.Appeals Process.
(a)
Applicability.
(1)
This subchapter applies to appeals of use determinations
issued by the executive director for use determination applications that are
declared administratively complete on or after September 1, 2001. A proceeding
based upon an appeal filed under this subchapter is not a contested case for
purposes of Texas Government Code, Chapter 2001.
(2)
Persons who may appeal a determination by the executive
director. The following persons may appeal a use determination issued by the
executive director:
(A)
the applicant seeking a use determination; and
(B)
the chief appraiser of the appraisal district for the county
in which the property for which a use determination is sought is located.
(b)
Form and timing of appeal. An appeal must be in writing
and be filed by United States mail, facsimile, or hand delivery with the chief
clerk of the commission within 20 days after the receipt of the executive
director's determination letter. A person is presumed to have been notified
on the third regular business day after the date the notice of the executive
directors action is mailed by first class mail. If an appeal meeting the requirements
of this subsection is not filed within the time period specified, the executive
director's use determination is final. An appeal filed under this subchapter
must:
(1)
provide the name, address, and daytime telephone number
of the person who files the appeal;
(2)
give the name and address of the entity to which the use
determination was issued;
(3)
provide the use determination application number for the
application for which the use determination was issued;
(4)
request commission consideration of the use determination;
and
(5)
explain the basis for the appeal.
(c)
Appeal processing. The chief clerk shall:
(1)
deliver or mail to the executive director a copy of the
appeal;
(2)
deliver or mail a copy of the appeal to the applicant if
the appeal was filed by the chief appraiser or to the chief appraiser if the
appeal was filed by the applicant; and
(3)
schedule the appeal for consideration at the next regularly
scheduled commission meeting for which adequate notice can be given.
(d)
Action by the commission.
(1)
The person seeking the determination and the chief appraiser
may testify at the commission meeting at which the appeal is considered.
(2)
The commission may remand the matter to the executive director
for a new determination or deny the appeal and affirm the executive director's
use determination.
(3)
If the commission denies the appeal and affirms the executive
director's use determination, the commission's decision shall be final and
appealable.
(e)
Action by the executive director.
(1)
If the commission remands a use determination to the executive
director, the executive director shall:
(A)
conduct a new technical review of the application which
includes an evaluation of any information presented during the commission
meeting; and
(B)
upon completion of the technical review, issue a new determination.
A copy of the new determination shall be mailed to both the applicant and
the chief appraiser of the county in which the property is located.
(2)
A new determination by the executive director may be appealed
to the commission in the manner provided by this subchapter.
(f)
Withdrawn appeals. An appeal may be withdrawn by the entity
who requested the appeal. The withdrawal must be in writing, and give the
name, address, and daytime telephone number of the person who files the withdrawal,
and the withdrawal shall indicate the identification number of the use determination.
The withdrawal must be filed by United States mail, facsimile, or hand delivery
with the chief clerk of the commission.
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 December 20, 2001.
TRD-200108163
Stephanie Bergeron
Director, Environmental Law Division
Texas Natural Resource Conservation Commission
Effective date: January 9, 2002
Proposal publication date: September 28, 2001
For further information, please call: (512) 239-6087
30 TAC §60.1
The Texas Natural Resource Conservation Commission (agency,
commission, or TNRCC) adopts new §60.1, Compliance History. The commission
adopts new Chapter 60 to implement certain requirements of House Bill (HB)
2912, 77th Legislature, 2001, regarding compliance history. Section 60.1 is
adopted
with changes
to the proposed text
as published in the October 12, 2001, issue of the
Texas Register
(26 TexReg 7974).
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES
House Bill 2912, 77th Legislature, 2001, §4.01, amended Texas Water
Code (TWC), Chapter 5, Texas Natural Resource Conservation Commission, by
adding Subchapter Q, Performance-Based Regulation. New Subchapter Q of TWC, §5.753,
Standard For Evaluating Compliance History, requires the commission to "develop
a uniform standard for evaluating compliance history." The purpose of this
adopted rule is to define the components of compliance history.
The commission currently has procedures for preparation of compliance summaries
for permit applications for waste disposal activities conducted under the
authority of TWC, Chapters 26 and 27, and the Texas Solid Waste Disposal Act,
Texas Health and Safety Code (THSC), Chapter 361, and the Texas Radiation
Control Act, THSC, Chapter 401, and these procedures are specified in existing
30 TAC §281.21(d). These procedures specify that a compliance summary
shall cover at least the two-year period preceding the date on which the technical
review is completed and shall include: 1) the date(s) and descriptions of
any citizen complaints received; 2) the date(s) of all agency inspections,
and for each inspection, whether a condition of noncompliance was alleged
by the inspector and a brief description of the resulting environmental impact;
3) the date(s) of any agency enforcement action and the applicant's response
to such action; 4) the date(s) and description of any incident the applicant
reported to the agency which required implementation of the facility contingency
plan, if applicable; and 5) the name and telephone number of a person to contact
for additional compliance history.
The commission currently has procedures for preparation of compliance summaries
for permit applications for air emissions under the authority of the Texas
Clean Air Act, THSC, Chapter 382, and these components are specified in existing
30 TAC §116.122. The associated procedures specify that a compliance
summary shall cover five years and shall include the following compliance
events and associated information involving the Texas facility that is the
subject of the permit application: criminal convictions known to the commission
and civil orders, judgments, and decrees; administrative enforcement orders;
and compliance proceedings. For facilities with sites outside the State of
Texas, the compliance summary shall include criminal convictions and civil
judgments, administrative enforcement orders, and notices of violation issued
by the United States Environmental Protection Agency (EPA). Furthermore, §116.122
specifies that violations of fugitive emission monitoring and recordkeeping
requirements meeting certain criteria shall not be included in the compliance
history.
The commission is also required by TWC, §7.053 to consider compliance
history (as one of several factors) for purposes of assessing administrative
penalties in commission enforcement actions. As reflected in the commission's
penalty policy (first revision, effective January 1, 1999), when assessing
compliance history for enforcement purposes, a five-year history of the violator
is examined in all programs of all media under the jurisdiction of the commission
for the specific site under enforcement. Additionally, in evaluating the violator,
the histories of all of its locations in the state are considered for the
medium or media of concern in the enforcement action. For example, this includes
multiple water or wastewater plants owned by a city; parent, sister, or daughter
companies in a corporate entity; and companies owned by each partner in a
partnership. Furthermore, if the site of the violation has undergone a change
in ownership, both the five-year histories of the site itself and of the new
owner are examined. The components of compliance history considered for enforcement
purposes are previous commission or federal enforcement orders that include
findings of fact and conclusions of law, district court orders, federal court
orders, or criminal convictions related to environmental laws.
The commission currently uses compliance history as a criterion for participation
in the voluntary Clean Texas Program. Any facility that has been issued a
findings order by the commission within three years prior to the application
date is ineligible to participate. Any facility that has been the subject
of a state or federal district court judgment for up to three years prior
to the application is also ineligible to participate. Lastly, any facility
with a criminal conviction or whose employees have a criminal conviction for
infraction of environmental laws is ineligible to participate.
Adopted new Chapter 60 will implement the requirement of HB 2912, §4.01
to "develop a uniform standard for evaluating compliance history" by specifying
the components to be considered in evaluating compliance history for permit
decisions, as well as other specified types of authorizations, including licenses,
certificates, registrations, approvals, permits by rule, standard permits,
or other forms of authorization requiring agency approval. As specified in
TWC, §5.751, the compliance history requirements of HB 2912 do not apply
to occupational licensing programs under the jurisdiction of the commission.
As adopted, with respect to authorizations, this chapter only applies to forms
of authorization, including temporary authorizations, that require some level
of notification to the agency, and which, after receipt by the agency, requires
the agency to make a substantive review of and approval or disapproval of
the authorization required in the notification or submittal. For the purposes
of this rule, "substantive review of and approval or disapproval" means action
by the agency to determine, prior to issuance of the requested authorization,
and based on the notification or other submittal, whether the person making
the notification has satisfied statutory or regulatory criteria that are prerequisites
to issuance of such authorization. The term "substantive review or response"
does not include confirmation of receipt of a submittal. This rule will not
apply to permit actions such as: voluntary permit revocations; minor amendments
and nonsubstantive corrections to permits; Texas pollutant discharge elimination
system (TPDES) and underground injection control minor permit modifications;
Class 1 solid waste modifications, except for changes in ownership; municipal
solid waste Class I modifications, except for temporary authorizations and
municipal solid waste Class I modifications requiring public notice; permit
alterations; administrative revisions; or air quality new source review permit
amendments which meet the criteria of 30 TAC §39.402 and minor permit
revisions under 30 TAC Chapter 122, unless a motion for reconsideration or
a motion to overturn is filed under 30 TAC §50.39 or §50.139 with
respect to the listed permit actions and set for commission agenda. The bill
further states that compliance history must be utilized in agency decisions
regarding enforcement, the use of announced inspections, and participation
in innovative programs. House Bill 2912 applies to programs under the jurisdiction
of the commission under TWC, Chapters 26 and 27, and THSC, Chapters 361, 382,
and 401.
New Chapter 60 adopts a compliance period of five years. The period of
time will be based on the five-year period preceding the date the permit application
is received by the executive director; the five-year period preceding the
date of initiating an enforcement action with an initial enforcement settlement
offer or the filing date of an Executive Director's Preliminary Report (EDPR),
whichever occurs first; for purposes of determining whether an announced inspection
is appropriate, the five-year period preceding an inspection; or the five-year
period preceding the date the application for participation in an innovative
program is received by the executive director, as applicable. According to
HB 2912, §18.05, beginning February 1, 2002, the executive director shall
develop compliance histories with the components specified in this chapter.
Additionally, §18.05 specifies that this adopted new chapter will
apply in the consideration of compliance history for decisions by the agency
relating to the issuance, amendment, modification, or renewal of permits under
TWC, §§5.754, 26.028, 26.0281, 26.040, and 27.018, and THSC, §§361.084,
361.088, 361.089, 382.0518, 382.055, 382.056, 401.110, and 401.112, only to
applications submitted on or after September 1, 2002; in the consideration
of compliance history for actions taken by the agency relating to inspections
and flexible permitting, effective September 1, 2002; and in the consideration
of compliance history in decisions of the commission relating to the suspension
or revocation of a permit or the imposition of a penalty in a matter under
the jurisdiction of the commission, only to a proceeding that is initiated
or an action that is brought on or after September 1, 2002. Use of compliance
history for innovative programs (except flexible permits) and other forms
of authorization will begin September 1, 2002. These applicability dates are
specified in adopted new §60.1.
The components of compliance history specified in new Chapter 60 include:
final enforcement orders, court judgments, consent decrees, and criminal convictions
of this state and the federal government relating to compliance with applicable
legal requirements under the jurisdiction of the commission or the EPA; orders
issued under TWC, §7.070; to the extent readily available, final enforcement
orders, court judgments, and criminal convictions relating to violations of
environmental laws of other states; chronic excessive emissions events; any
information required by other law or any requirements necessary to maintain
federal program authorization; dates of investigations; notices of violations;
any notices of audits conducted and any violations disclosed under the Texas
Environmental, Health, and Safety Audit Privilege Act (Texas Audit Act), 74th
Legislature, 1995; the type of environmental management systems (EMS) used
for environmental compliance; any voluntary on-site compliance assessments
conducted by the executive director under a special assistance program; participation
in a voluntary pollution reduction program; a description of early compliance
with or offer of a product that meets future state or federal government environmental
requirements; and the name and telephone number of an agency staff person
to contact for additional information regarding compliance history. Additionally,
compliance histories will cover all media, including air, water, and waste.
Changes in ownership will also be reflected.
Adopted §60.1 only implements the first phase of HB 2912, §4.01,
as it relates to the definition, or components of, compliance history. The
next phase of the implementation of HB 2912, §4.01, relating to the use
of compliance history, will be accomplished through additional rulemaking.
House Bill 2912, §18.05(b), specifies that, not later than September
1, 2002, the commission by rule shall establish the standards for the classification
and use of compliance history, as required by TWC, §5.754. This additional
rulemaking will include modifications to Chapter 60, as well as to other applicable
chapters of commission rules for the purpose of implementing the compliance
history requirements of HB 2912, §4.01.
The commission solicited comments regarding applicability and appropriate
components for use in defining a person's compliance history. The commission
received 561 comments in response to the public comment period referenced
in the SUBMITTAL OF COMMENTS section of the proposal preamble. All comments
are addressed in the RESPONSE TO COMMENTS section of this adoption preamble.
SECTION DISCUSSION
Section 60.1 is adopted with changes to the proposed text. Adopted new §60.1,
Compliance History, will implement the requirements of TWC, §5.753. Specifically,
the adopted language will establish the components of compliance history the
agency must consider prior to certain decisions. In this phase of rulemaking
associated with the implementation of HB 2912, §4.01 regarding compliance
history, the way the agency will use compliance history in certain decisions
is not addressed; rather, this adopted language will only address the applicability
and components of compliance history.
The commission adopts new §60.1(a), concerning applicability, with
changes to the proposed text. The majority of the changes to the proposed
subsection have been made to break the text into additional paragraphs and
subparagraphs for clarity. The adopted subsection states that the chapter
will be applicable to persons subject to the requirements of TWC, Chapters
26 and 27 and THSC, Chapters 361, 382, and 401. The adopted subsection will
mirror HB 2912, §4.01, as it creates new TWC, §5.754(e) by specifying
that the agency will utilize compliance history when making decisions regarding
the issuance, renewal, amendment, modification, denial, suspension, or revocation
of a permit; enforcement; the use of announced investigations; and participation
in innovative programs. This portion of the rule has been broken out into
new paragraph (1)(A) - (D) for clarity and ease in reading. Additionally,
the word "inspections" has been changed to "investigations" for consistency.
This adopted subsection will also specify that, for purposes of this new chapter,
"permit" means licenses, certificates, registrations, approvals, permits by
rule, standard permits, or other forms of authorization. This is to reflect
the definition of "permit" included in TWC, §5.751. This portion of the
rule has been separated into new paragraph (2) for clarity and ease in reading.
Additionally, the term "person" as used in this chapter is the same as found
in 30 TAC Chapter 3.
The types of permits, licenses, certificates, registrations, approvals,
permits by rule, and standard permits over which the commission has jurisdiction
can be categorized into two groups. The first group can be referred to as
a "no decision" process. This term includes a situation in which a person
informs the agency, as required by rule, that they is engaging in a certain
regulated activity for which there is no specific approval required. For example,
changes to qualified facilities under 30 TAC §116.117 and §116.118.
Additionally, the "no decision" process includes activities that are authorized
by rule for which notification may or may not be required, but no agency approval
is required for the site to be authorized. The following are examples of required
notifications that do not require response by the agency: the on-site management
of nonhazardous waste for which a notification is required by 30 TAC §335.6;
underground or aboveground storage tanks registered under 30 TAC §334.7
or §334.127; emissions authorized by 30 TAC Chapter 106, where no written
site approval is required; emissions authorized by 30 TAC Chapter 116, Subchapter
F (relating to Standard Permits), where no written site approval is required;
and waste discharge (including storm water and wastewater) notices of intent
under 30 TAC Chapter 205, where no written approval is required.
Other types of permits can be referred to as a "decision" process. This
group includes authorizations which require notification or application, an
agency review, and site-specific agency approval or response. Examples of
this category include municipal solid waste transfer stations as required
by 30 TAC §330.65, and tire processing facilities as required by 30 TAC §328.63.
This category also includes the more traditional permit decisions, such as
authorization for an air permit under 30 TAC §116.111, and authorization
for a Class I underground injection control well under 30 TAC §331.7.
Adopted new §60.1 will only be applied to those permits or other forms
of authorization, including temporary authorizations, requiring the "decision"
process. The language as proposed has been separated out into new paragraph
(3) for clarity and ease in reading. Additionally, it has been modified for
clarity to reflect that it refers to authorizations which require the agency
to make a substantive review of and approval or disapproval of them, and defines
"substantive review of an approval or disapproval" as an action by the agency
to determine, prior to issuance of the requested authorization, and based
on the notification or other submittal, whether the person making the notification
has satisfied statutory or regulator criteria that are prerequisites to issuance
of such authorization.
The commission considered whether the actions under 30 TAC Chapter 101,
Subchapter H, relating to Emissions Banking and Trading, are subject to the
compliance history review requirements. The commission determined that these
actions are not subject to the compliance history review requirements because
they are not a form of authorization. The actions under Subchapter H are compliance
methods for achieving the emissions reductions required under the state implementation
plan as required by 30 TAC Chapter 117, and providing flexibility for compliance
with 30 TAC Chapters 115 and 117.
The commission considered whether executive director actions regarding
the remediation of spills or other contamination are subject to the compliance
history review requirements. These actions are required under commission rules
and the executive director reviews the actions taken during remediation to
determine compliance with the rules and gives approval to implement the next
requirement. However, the executive director is not authorizing any new activity
and thus the commission determined that these actions are not subject to the
compliance history review requirements.
The commission also considered whether there are specific kinds of permit
actions which do not require compliance histories to be compiled. The commission
suggests that permit actions such as voluntary permit revocations; minor amendments
and nonsubstantive corrections to permits; TPDES and underground injection
control minor permit modifications; Class 1 solid waste modifications, except
for changes in ownership; municipal solid waste Class I modifications, except
for temporary authorizations and municipal solid waste Class I modifications
requiring public notice; permit alterations; administrative revisions; and
air quality new source review permit amendments which meet the criteria of §39.402(a)(1)
- (3) and minor permit revisions under Chapter 122, do not substantially change
the current authorizations, but add clarity, correct typographical errors,
update contact information, or make other minor changes where the minor changes
are equally protective of human health and the environment or are de minimis
or insignificant. Therefore, the commission has determined that this rule
will not be applicable to these types of permit actions, unless a motion for
reconsideration or a motion to overturn is filed under 30 TAC §50.39
or §50.139 with respect to the listed permit actions and has modified
the language to specify that it only applies in a situation where the item
is set for a commission agenda. However, the language regarding a motion for
reconsideration or a motion to overturn has been moved to adopted §60.1(a)(8)
for better organization and clarity. The proposed language regarding the permit
actions to which this chapter does not apply has been slightly modified for
clarity to read, "Notwithstanding paragraphs (2) and (3) of this subsection,
this chapter does not apply to certain permit actions such as:", has been
separated out into new paragraph (4)(A) - (G) for clarity and ease in reading,
and new language regarding air quality new source review permit amendments
and minor permit revisions has been added at subparagraph (H) for further
clarification.
The adoption will reflect that Chapter 60 does not apply to occupational
licensing programs under the jurisdiction of the commission, which is stated
in TWC, §5.751. The language as proposed has not been modified, but it
has been separated out into new paragraph (5) for clarity and ease in reading.
The commission has moved the first sentence of proposed §60.1(b),
Components, with changes, to new paragraph (6). First, this sentence now reads,
"Beginning February 1, 2002, the executive director shall develop compliance
histories with the components specified in this chapter," as specified in
HB 2912, §18.05(i), which states that
the changes
made by HB 2912 in the definition of compliance history
apply to an
action taken by the agency on or after February 1, 2002. The text of this
first sentence has been changed from "The components of compliance history
as specified in adopted Chapter 60 shall apply to an action taken by the agency
on or after February 1, 2002," in answer to many questions raised by commenters
as a result of the proposed language as to what the February 1, 2002 date
actually applies to. Further discussion is provided in the RESPONSE TO COMMENTS
section of this preamble. Additionally, this sentence was taken out of the
Components subsection and moved into the Applicability subsection for better
organization and clarity.
With regard to required implementation dates, as specified in HB 2912, §18.05,
the adopted subsection reflects that new Chapter 60 applies as follows: in
the consideration of compliance history for decisions by the agency relating
to the issuance, amendment, modification, or renewal of permits under TWC, §§5.754,
26.028, 26.0281, 26.040, and 27.018, and THSC, §§361.084, 361.088,
361.089, 382.0518, 382.055, 382.056, 401.110, and 401.112, only to applications
submitted on or after September 1, 2002; in the consideration of compliance
history for actions taken by the agency relating to inspections and flexible
permitting, effective September 1, 2002; and in the consideration of compliance
history in decisions of the commission relating to the suspension or revocation
of a permit or the imposition of a penalty in a matter under the jurisdiction
of the commission, only to a proceeding that is initiated or an action that
is brought on or after September 1, 2002. Additionally, the compliance history
requirements as adopted, apply to decisions by the executive director relating
to other forms of authorization and innovative programs to begin September
1, 2002. The proposed language has been slightly modified, and has been renumbered
from paragraphs (1) - (4) to new paragraph (7)(A) - (D), in response to comments
made concerning this language, as well as other changes made to this subsection
for clarity and ease in reading.
As stated previously, the language regarding a motion for reconsideration
or a motion to overturn has been moved to adopted §60.1(a)(8) for better
organization and clarity. The commission has determined that this chapter
will not be applicable to the types of permit actions specified in adopted §60.1(a)(4)
as not requiring the compilation of compliance histories, unless a motion
for reconsideration or a motion to overturn is filed under 30 TAC §50.39
or §50.139 with respect to the listed permit actions and set for a commission
agenda.
The commission adopts new §60.1(b), with changes to the proposed text.
First, the first sentence of this proposed subsection has been modified and
moved to new §60.1(a)(6) for better organization and clarity, in answer
to many questions raised by commenters as a result of the proposed language
as to what the February 1, 2002 date actually applies to. Further discussion
is provided in the RESPONSE TO COMMENTS section of this preamble. Additionally,
the second sentence of this proposed subsection, beginning, "The compliance
history shall include multimedia ...," along with the phrase at the end of
the proposed subsection, "The components are:" have been moved from subsection
(b) to new subsection (c) for better organization and clarity. The only remaining
language in subsection (b) pertains to the compliance period, and thus, the
title of this subsection has been changed to "Compliance period."
The adopted language of subsection (b) has been further modified to require
that compliance history cover no more than the five-year period prior to receipt
of an application or initiation of an enforcement action, rather than "at
least a five-year period" as proposed. This will include the five years prior
to the date the permit application is received by the executive director;
the five-year period preceding the date of initiating an enforcement action
with an initial enforcement settlement offer or the filing date of an EDPR,
whichever occurs first; with regard to the use of announced investigations,
the five-year period preceding an investigation; or the five-year period preceding
the date the application for participation in an innovative program is received
by the executive director. This portion of the rule reflects a change in what
the five-year period with respect to an enforcement action is based on, changed
from the proposal which was five years preceding the date of the investigation
that initiates an enforcement action. Additionally, with regard to announced
versus unannounced investigations, again the word "inspection" has been replaced
with "investigation" for consistency throughout the rule. This adopted language
is meant to establish by rule "a period for compliance history" as required
by TWC, §5.753(e). Furthermore, language has been added to this subsection
to specify in the rule that a compliance history may be supplemented for the
time period needed to process a permit application. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. Again, further discussion
of the changes made to this subsection are provided in the RESPONSE TO COMMENTS
section of this preamble.
The commission adopts new §60.1(c), Components, with changes to the
proposed text, to specify the components of compliance history that the agency
must consider under applicable circumstances. This adopted new subsection
states that compliance history shall include multimedia compliance-related
information about a person, specific to the site which is under review as
well as other sites which are owned or operated by the same person. The only
change made to this sentence was the removal of the phrase "under the commission's
jurisdiction." This has been deleted because it is not an accurate statement
due to the fact that HB 2912 requires the agency to include as components
of compliance history, enforcement-related actions that have taken place outside
the state of Texas and which are therefore, not under the commission's jurisdiction.
With regard to the actual components of compliance history, the commission
adopts new §60.1(c)(1), which was proposed as §60.1(b)(1), and which
mirrors TWC, §5.753(b)(1). This paragraph provides that one component
of compliance history must include any enforcement orders, court judgments,
consent decrees, and criminal convictions of this state and the federal government
relating to compliance with an environmental law, regulation, permit, order,
consent, decree, or other requirement under the jurisdiction of the commission
or the EPA. The proposed text has been changed to "any final enforcement orders,
court judgments, consent decrees, and criminal convictions of this state and
the federal government relating to compliance with applicable legal requirements
under the jurisdiction of the commission or the EPA. "Applicable legal requirement"
means an environmental law, regulation, permit, order, consent decree, or
other requirement." The word "final" has been added to reflect that this component
will not include draft or proposed enforcement orders, court judgments, or
consent decrees. The definition of "applicable legal requirement," instead
of being contained within the first sentence of the text, has been separated
out for clarity and originates directly from TWC, §5.752(1).
The commission adopts new §60.1(c)(2), which was proposed as §60.1(b)(2),
to comply with the requirement of TWC, §5.753(b)(2), which provides that,
notwithstanding any other provision of the TWC, orders issued under TWC, §7.070
must be included in the agency's consideration of compliance history. The
language was proposed as, "notwithstanding any other provision of the TWC,
orders issued under TWC, §7.070 on or after February 1, 2002." February
1, 2002 was proposed because currently, commission orders issued under TWC, §7.070,
include language specifically stating that the order is not intended to become
a part of the respondent's compliance history. As of the effective date of
TWC, §5.753(b)(2), which is February 1, 2002, the compliance history
portion of TWC, §7.070, is superceded, and orders issued under this section
of the statute will be considered in compliance history. In the interim, the
commission has also modified the existing language in applicable proposed
enforcement orders to reflect the February 1, 2002, change to these types
of orders. The rule language has been modified to read, "notwithstanding any
other provision of the TWC, orders developed under TWC, §7.070 and approved
by the commission on or after February 1, 2002." This nominal change was made
due to the timing of the commission's agendas in January 2002. Specifically,
those agendas are scheduled for January 16, and January 30, 2002. Additionally,
the issuance date (or effective date) of a commission order is, under 30 TAC §70.10(b),
the date of hand-delivery of the order to the respondent, or three days after
the date on which the commission mails notice of the order to the respondent,
whichever is earlier. The adopted change will allow a more clear demarcation
as to what orders will be included in compliance history.
The commission adopts new §60.1(c)(3), which was proposed as §60.1(b)(3),
and which will require that, to the extent readily available to the executive
director, enforcement orders, court judgments, and criminal convictions relating
to violations of environmental laws of other states must be considered as
a component of compliance history. This component is required by TWC, §5.753(b)(3).
The commission intends to utilize the EPA Integrated Compliance Information
System and its retrieval component, Online Tracking Information System or
any subsequent equivalent system(s) to retrieve the administrative and civil
enforcement information which is extracted from the program-specific EPA databases.
Commission decisions regarding compliance history that are based upon information
contained on the EPA Integrated Compliance Information System shall not be
voided by the subsequent discovery of enforcement orders and court judgments
relating to violations of environmental laws of other states that were not
noted in the EPA Integrated Compliance Information System. The only change
to the proposed text is the addition of the word "final" to reflect that this
component will not include draft or proposed enforcement orders or court judgments.
The commission adopts new §60.1(c)(4), which was proposed as §60.1(b)(4),
and which will require that chronic excessive emissions events be included
as a component of compliance history. This implements HB 2912, §5.01,
which adds chronic excessive emissions events as a statutory requirement in
new THSC, §382.0216(j). The adopted paragraph will further state that,
for purposes of new Chapter 60, the term "emissions event" is the same as
defined in THSC, §382.0215(a).
The commission adopts new §60.1(c)(5), which was proposed as §60.1(b)(5),
mirroring the language in TWC, §5.753(c), which states that any information
required by other law or any requirement necessary to maintain federal program
authorization must be included as a compliance history component.
The commission adopts new §60.1(c)(6), which was proposed as §60.1(b)(6),
which will require that the dates of investigations conducted by the executive
director or his contractors be included as a component of compliance history.
This information will reflect how many investigations have taken place during
the five-year compliance period, allowing for a better perspective with regard
to the other components of compliance history, especially those in adopted
subsection (c)(1) - (5), and (7). For example, it will be important to know
whether the facility had been inspected during the compliance period, and
how many times when there are no notices of violations or orders present during
the compliance period.
The commission adopts new §60.1(c)(7), which was proposed as §60.1(b)(7),
with changes. Section 60.1(c)(7) states that all written notices of violation
(NOVs), including written notification of a violation from a regulated person,
issued on or after September 1, 1999, except for those administratively determined
to be without merit, must be included as a component of compliance history,
specifying each violation of state environmental law, regulation, permit,
order, consent decree, or other requirement. This requirement implements TWC, §5.753(d),
which specifically states that an NOV administratively determined to be without
merit will not be included in a compliance history. Additionally, an NOV that
is included in a compliance history will be removed from the compliance history
if the commission subsequently determines that the NOV was without merit,
as required by TWC, §5.753(d). The commission is adopting the use of
written NOVs issued on or after September 1, 1999, which is a change from
the proposed February 1, 2002 date, in order to more effectively implement
TWC, §5.753(d). Additional changes to this paragraph include the addition
of language specifying that written notifications of a violation from a regulated
entity (self-reported violations) are included in this category of compliance
history component. Finally, the word "an" was changed to "a state" as it precedes
"environmental law, regulation, permit, order, consent decree, or other requirement"
to limit the use of NOVs to those regarding violation of Texas requirements.
Further discussion of the changes made to this paragraph are provided in the
RESPONSE TO COMMENTS section of this preamble.
The commission has determined that there are other components of compliance
history that it should consider to fully evaluate a person's commitment to
environmental excellence. Therefore, the commission adopts new §60.1(c)(8),
which was proposed as §60.1(b)(8), and which will require, as applicable,
the date of letters notifying the executive director of an intended audit
conducted under the Texas Audit Act, to be included as a component of compliance
history. These voluntary compliance audits can be a useful tool for members
of the regulated community to determine if their practices conform to all
applicable regulations. The language has been modified to read, "the date
of letters notifying the executive director of an intended audit conducted
and any violations disclosed under the Texas Environmental, Health, and Safety
Audit Privilege Act, 74th Legislature, 1995." The phrase "and any violations
disclosed" has been added because the Texas Audit Act requires that violations
disclosed be included in compliance histories. The Texas Audit Act, §10(i)
states, "A violation that has been voluntarily disclosed and to which immunity
applies must be identified in a compliance history report as being voluntarily
disclosed."
The commission also adopts new §60.1(c)(9), which was proposed as §60.1(b)(9),
and which will require the type of EMS, if any, used for environmental compliance
to be included as a component of compliance history. The inclusion of EMS
in compliance history satisfies the statutory requirement contained in HB
2997 to amend TWC, §26.028 by adding new subsection (e) and re-lettering
existing subsections (e) - (g) as subsections (f) - (h) to include information
regarding an EMS in an applicant's compliance history and compliance summaries
for which an authorization is sought. Environmental management systems are
another voluntary tool that the regulated community may use to evaluate their
own environmental management practices, confirm compliance with environmental
rules and regulations, and emphasize management oversight of regulated activities.
The commission recognizes that small entities are very concerned about
environmental compliance but may not have the resources needed to conduct
detailed assessments of their regulated activities. Therefore, the commission
adopts new §60.1(c)(10), which was proposed as §60.1(b)(10), and
which will require any voluntary on-site compliance assessments conducted
by the executive director under a special assistance program, such as assessments
conducted by Small Business Environmental Assistance Division under the site
visit program to be included as a component of compliance history. These voluntary
assessments are conducted upon request.
The commission also recognizes that voluntary pollution reduction programs
are an important tool in addressing environmental concerns in the state beyond
regulatory requirements, and reflects a person's commitment to environmental
excellence. Therefore, the commission adopts new §60.1(c)(11), which
was proposed as §60.1(b)(11), and which will require participation in
a voluntary pollution reduction program to be included as a component of compliance
history.
The commission adopts new §60.1(c)(12), which was proposed as §60.1(b)(12),
and which will require, as a part of compliance history, a description of
early compliance with or offer of a product that meets future state or federal
government environmental requirements. Accelerating the implementation of
new requirements that are intended to benefit the environment is a choice
that a person may make. This voluntary early compliance is also a reflection
of a person's commitment to environmental excellence.
Finally, with regard to the components of compliance history, the commission
adopts new §60.1(c)(13), which was proposed as §60.1(b)(13), and
which requires that the name and telephone number of an agency staff person
to contact for additional information regarding compliance history be included.
The commission adopts new §60.1(d), which was proposed as §60.1(c),
Change in Ownership, with changes. Adopted §60.1(d) will state that if
ownership of the site changed during the five-year compliance period, a distinction
of compliance history of the site under each owner during that five-year period
shall be made. Specifically, the adopted language states that for any part
of the compliance period that involves a different, previous owner, the compliance
history will include only the site under review. The distinction for previous
owners is that adopted §60.1(b) will require that for the current owner
of the site, the compliance history will include the site under review as
well as other sites which are under the commission's jurisdiction and owned
or operated by the same person. The words "be assessed for" have been changed
to "include" in order to address concerns raised by commenters. Further discussion
can be found in the RESPONSE TO COMMENTS section of this preamble. Additionally,
the subsection has changed from (c) to (d) in response to other changes made
for better organization and clarity. Similarly, reference to subsections (b)
and (c) is now made, where as proposed it was only (b), due to the addition
of a new subsection for organizational purposes. Furthermore, the word "different"
has been changed to "previous" for clarity, and the sentence, "For the purposes
of this rule, a change in operator shall be considered a change in ownership
if the operator is a co-permittee." has been added to clarify when an operator's
compliance history would be included.
The commission has determined that for purposes of developing compliance
histories, "ownership" will only include the entity filing the permit application,
under enforcement, being inspected, or applying for participation in an innovative
program, as defined by its legal name. For example, any parent, sister, or
daughter corporations related to the legal entity will not be included.
FINAL REGULATORY IMPACT ANALYSIS DETERMINATION
The commission has reviewed the adopted 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 that statute.
Although the intent of this rule is to protect the environment and reduce
the risk to human health from environmental exposure, this is not a "major
environmental rule" because it 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. The rule will 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 because
the rule merely adds the new requirements relating to the components of compliance
history. These requirements are contained in TWC, §5.753. The reason
there is no adverse effect in a material way on the environment, or the public
health and safety of the state or a sector of the state is because this adopted
rule is designed to protect the environment, the public health, and the public
safety of the state and all sectors of the state. Furthermore, the adopted
rule does not meet any of the four applicability requirements listed in §2001.0225(a).
The adopted rule does not exceed a standard set by federal law, because there
is no comparable federal law. The adopted rule does not exceed an express
requirement of state law, and it is consistent with the requirements of TWC, §5.753.
The adopted rule does not exceed the requirements of a delegation agreement
because there is no applicable delegation agreement. The rule is not being
adopted solely under the general powers of the agency, but is being adopted
under the express requirements of TWC, §5.753. The commission invited
public comment on the draft regulatory impact analysis determination. No comments
were received.
TAKINGS IMPACT ASSESSMENT
The commission prepared a takings impact assessment for this adopted rule
in accordance with Texas Government Code, §2007.043. The following is
that assessment. The specific purpose of this adopted rule is to incorporate
the new requirements relating to the components of compliance history, which
are contained in TWC, §5.753. The subject adopted rule does not affect
a landowner's rights in private real property.
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed the 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 Coastal Management Program, nor
will it affect any action/authorization identified in Coastal Coordination
Act Implementation Rules, 31 TAC §505.11. Therefore, the adopted rule
is not subject to the Coastal Management Program.
HEARING AND COMMENTERS
The commission held a public hearing on this proposal in Austin on November
12, 2001, at the Texas Natural Resource Conservation Commission complex. No
individuals provided oral comments at the hearing. The following provided
written comments during the comment period: Representative Fred M. Bosse (Representative
Bosse); Representative Lon Burnam (Representative Burnam); Representative
Glen Maxey (Representative Maxey); Representative Ruth Jones McClendon (Representative
McClendon); Representative Robert R. Puente (Representative Puente); Strasburger &
Price, LLP on behalf of 7-Eleven, Inc. (7-Eleven); Alliance for a Clean Texas
(ACT); American Public Works Association, Texas Chapter (TPWA); Association
of Electric Companies of Texas, Inc. (AECT); Association of Texas Intrastate
Natural Gas Pipelines (ATINGP); BP Amoco (BP); Brazos River Authority (BRA);
Brown McCarroll, L.L.P. (Brown McCarroll); Cantey & Hanger, LLP (Cantey &
Hanger); City of Fort Worth Water Department (Fort Worth); Birch & Becker,
L.L.P. on behalf of the City of Garland, City of San Antonio, Greenville Electric
Utility System, and San Miguel Electric Cooperative, Inc. (Birch & Becker);
the City of Plano (Plano); ExxonMobil Chemical Company (EMCC); ExxonMobil
Refining & Supply Company (ExxonMobil Refining); Galveston-Houston Association
for Smog Prevention (GHASP); Reaud, Morgan & Quinn, Inc., on behalf of
Huntsman Corporation, Huntsman Petrochemical Corporation, and Huntsman Polymers
Corporation (Huntsman); Industry Council on the Environment (ICE); Jones,
Day, Reavis & Pogue (Jones Day); North Texas Municipal Water District
(NTMWD); Port of Houston Authority (PHA); Solid Waste Association of North
America, Lone Star Chapter (TxSWANA); Texas Association of Business &
Chambers of Commerce (TABCC); Texas Cattle Feeders Association (TCFA); Texas
Chemical Council (TCC); Texas Committee on Natural Resources (TCONR); Texas
Cotton Ginners' Association (TCGA); Baker Botts L.L.P on behalf of the Texas
Industry Project (TIP); Texas Mining and Reclamation Association (TMRA); Texas
Municipal League (TML); Texas Petroleum Marketers & Convenience Store
Association (TPCA); Thompson & Knight L.L.P. (Thompson & Knight);
Vinson & Elkins L.L.P. (Vinson & Elkins); Waste Management of Texas,
Inc. (WMT); and 532 individuals.
The following commenters supported the proposal, either in general, or
in part: 7-Eleven; ACT; AECT; BP; Brown McCarroll; ExxonMobil Refining; ICE;
NTMWD; Plano; TCC; TCONR; TMRA; TPCA; TxSWANA; and Vinson & Elkins.
The following commenters opposed the proposal in part and suggested changes
to the proposal as stated in the RESPONSE TO COMMENTS section of this preamble:
Representative Bosse; Representative Burnam; Representative Maxey; Representative
McClendon; Representative Puente; 7-Eleven; ACT; TPWA; AECT; ATINGP; BP; Birch &
Becker; BRA; Brown McCarroll; Cantey & Hanger; Fort Worth; Plano; EMCC;
ExxonMobil Refining; GHASP; Huntsman; ICE; Jones Day; TxSWANA; NTMWD; PHA;
TABCC; TCFA; TCC; TCONR; TCGA; TIP; TMRA; TML; TPCA; Thompson & Knight;
Vinson & Elkins; WMT; and 532 individuals.
RESPONSE TO COMMENTS
New Chapter 60 has been added to implement the requirements of TWC, §5.753.
Specifically, the adopted language will establish the components of compliance
history the agency must consider prior to certain decisions.
General
Jones Day commented, "This rule should provide, in text or in preamble,
the outline of procedures for rehabilitating a facility from a poor compliance
history. Failing to do so functions as a disincentive for extraordinary action
by industry to bring problematic facilities into full compliance."
The commission responds that this comment is outside the scope of this
rulemaking. The commission acknowledges that TWC, §5.754 requires the
classification of a person's compliance history into one of a minimum of three
classifications, including "poor," "average," and "high." The proposed rule
is, however, only the first phase in developing the compliance history rules.
House Bill 2912, §18.05(a) requires the commission to establish the components
of compliance history, by rule, no later than February 1, 2002. This proposed
rule establishes those components. House Bill 2912, §18.05(b) requires
that the commission, by rule, shall establish the standards for classification
and use of compliance history not later than September 1, 2002. This will
be accomplished through the second phase of rulemaking. Although TWC, §5.754
requires the commission to classify a person's compliance history, rehabilitation
of a facility from a poor compliance history is outside the scope of this
rulemaking. The ways a regulated entity could improve their compliance history
will be apparent in the second phase of compliance history rulemaking in that
instituting specific positive components will improve compliance history.
In addition, the commission will be undertaking rulemaking governing the strategically-directed
regulatory structure which will include regulatory tiers under which entities
of all compliance history levels will be governed. No change has been made
in response to this comment.
Brown McCarroll stated that it "believes that these proposed rules are
generally faithful to the letter and substance of the statutory provisions
for which they are proposed to implement. Thus, we are in general agreement
on the TNRCC's approach on these proposed rules," but that it is providing
specific comments that it believes will make these proposed rules clearer
and more workable.
The commission appreciates this positive comment in support of the rule.
ExxonMobil Refining recommended that, "{a}ny consideration of historical
environmental information in the matter of a permit action must be heavily
weighted toward the compliance history of the facility making the application.
Some consideration can be given to other related instate facilities, with
the smallest consideration given to reports and information from other jurisdictions."
The commission responds that the issue of "weighting" the components of
compliance history will be addressed in the next phase of rulemaking regarding
the classification and use of compliance history. No changes have been made
in response to this comment.
Several commenters provided comments regarding the possible inaccuracy
of data included in a person's compliance history, and many recommended that
a regulated entity have the opportunity to review its compliance history prior
to its use by the agency or its being made available to the public. ExxonMobil
Refining recommended that the commission "give consideration to the problems
created by rule language that will empower TNRCC to punish Texas permit applicants
based upon possibly inaccurate, possibly erroneous notification of environmental
problems at facilities in other jurisdictions." AECT and ICE commented that
they have concerns that a site's compliance history has the potential to be
inaccurate because the sources of information that comprise such compliance
history may be inaccurate and/or mistakes may be made in the compilation of
the information that comprises the site's compliance history. To ensure that
the compliance history for a site is accurate, AECT and ICE both suggested
"that the rules and the associated preamble language provide that the person
who owns or operates a site" be provided with an opportunity to review and,
if necessary suggest corrections to "the compliance history the TNRCC has
compiled" for the site before it uses such compliance history in any way or
has made it available to the public. Similarly, Cantey & Hanger commented,
"Compliance history drafts which the TNRCC assembles based on the Proposed
Rule's components should be sent to a regulated entity to comment on before
they are published." TABCC stated that it "believes that the TNRCC should
have some procedure in place for allowing a company an opportunity to review
raw compliance history data prior to it becoming publicly available, particularly
if it contains information from other states and the EPA." Vinson & Elkins
commented that the "proposed Phase I regulations do not provide the entity
which is the subject of the compliance history review the opportunity to comment
upon the summary. Presumably, this will be addressed in the Phase II rulemaking.
Nonetheless, given the level of reliability and accuracy in information, particularly
concerning compliance information from other states, and the recognition that
a compliance summary also includes information about compliance with environmental
laws, it is imperative that the entity whose actions will be judged have the
opportunity to comment on the compliance summary." TCC commented that it "believes
that the regulated community should have the capability for prior review and
correction of any data that will be added to the compliance history from external
sources, and that this data should be publicly available. We do not believe
it appropriate to use any source of data that is not publicly available. This
is important because a company should have the opportunity to review out of
state information before it is made public to ensure it is accurate." Additionally,
in general, BP endorsed the comments submitted by TCC. Jones Day commented,
"The Commission should add procedures that allow a company to correct and
supplement the compliance history on file for its facilities. Under this new
rule, the accuracy of compliance history entered into the TNRCC files is too
important to be left without mechanisms to ensure accuracy." TIP commented
that "{c}ompanies should be able to correct and supplement their compliance
histories. This is particularly important to ensure that the aspects of a
facility's compliance history relating to size and complexity are included,
but is also relevant for such items ... as reviewing the accuracy of out-of-state
violations and updating positive aspects of compliance history. In this regard,
the TNRCC should allow the regulated community constant access to the system
for review of all aspects of compliance history. A system that allows such
review, as well as the ability to quickly correct any errors, is crucial to
a successful program." Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission appreciates the concern raised by the commenters and responds
that a regulated entity currently has, and will continue to have, the ability
to submit (additional) information for consideration on behalf of a claim
that information included in its compliance history is inaccurate and/or erroneous.
A regulated entity is free, and in fact encouraged, to provide information
for consideration to correct inaccuracies at any time. However, due to the
number of compliance histories that the agency will be preparing, it is not
feasible to send drafts to regulated entities prior to their use by the agency.
With regard to compliance histories being made "public," the commission responds
that it is subject to the Public Information Act. However, the information
held by other states as well as the EPA, is not under the commission's control
with regard to its availability to the public, up until such time as the commission
has such information in its possession, nor is the commission responsible
for or able to correct such information as it resides under its area of jurisdiction.
The commission responds that it will utilize information obtained from other
jurisdictions and that it is a regulated person's responsibility to ensure
that any erroneous information is corrected by the entity with jurisdiction.
With regard to the comment stating that the regulated community should be
allowed constant access to the system for review of all aspects of compliance
history, the commission responds that above and beyond the fact that it must
adhere to the requirements of the Public Information Act, TWC, §5.1733,
requires electronic posting of information. Specifically, it states, "The
commission shall post public information on its website. Such information
shall include but is not limited to the minutes of advisory committee meetings,
pending permit and enforcement actions, compliance histories, and emissions
inventories by county and facility name." The agency is working towards this
goal as it develops, proposes, and adopts rules pertaining to compliance histories.
As soon as practicable, this information will be available via the agency's
web site. No changes have been made in response to these comments.
One individual commented that he wishes the compliance history for regulated
entities was accessible to the public via the web.
The commission responds that the issue of compliance histories being available
to the public via the internet is outside the scope of this rulemaking. However,
TWC, §5.1733, requires electronic posting of information. Specifically,
it states, "The commission shall post public information on its website. Such
information shall include but is not limited to the minutes of advisory committee
meetings, pending permit and enforcement actions, compliance histories, and
emissions inventories by county and facility name." The agency is working
towards this goal as it develops, proposes, and adopts rules pertaining to
compliance histories. As soon as practicable, this information will be available
via the agency's web site. No change has been made in response to this comment.
TCONR commented, "The provisions of HB 2912 requiring the TNRCC to develop
a uniform and effective compliance history program were key components of
HB 2912. Unfortunately, some of the provisions in the proposed rules, if adopted,
would undermine the legislature's intent to ensure that the agency adopt a
uniform compliance history program that will reward highly compliant regulated
entities while assuring stricter oversight of chronic violators. We request
that the TNRCC give serious consideration to the comments our organization
has provided identifying the portions of the proposal that will act to frustrate
legislative intent and allow repeat and serious violators of environmental
laws to avoid any consequences."
The commission responds that certain components of the proposed rule have
been modified to more effectively implement HB 2912. Further, the commission
is working to effect compliance history rules that conform to the applicable
requirements of HB 2912, meet legislative intent, and ensure a uniform compliance
history program. However, the classification of compliance history, as reflected
in the commenter's reference to "highly compliant regulated entities," "chronic
violators," and "serious violators of environmental laws," and the use of
compliance history, as reflected in the commenter's references to "award"
as well as "avoid any consequences," are not addressed in this phase of compliance
history rulemaking; rather, the classification and use of compliance history
will be addressed in the second phase of compliance history rulemaking. No
changes have been made in response to this comment.
GHASP and 506 individuals commented that a "comprehensive compliance history
is one of the best tools for enforcing the regulations intended to protect
Texas and Texans and improving the performance of industry. The Legislature
decided that TNRCC should have and use that tool. Please see to it that the
agency follows the law's intent and does not create rules that would result
in an incomplete and ineffective compliance history." One of the individuals
commented additionally that, "A comprehensive compliance history would help
you to enforce regulations. With such a tool, we can force Texas industries
to operate according to twenty-first century standards, enhancing the state's
wealth, health, and prospects for the future." Similarly, another individual
commented, "TNRCC is so important to preserving our natural resources for
all of our citizens, present and future. The Legislature gave clear directives
for establishing compliance histories for polluters. As expected, industry
is working to weaken that aspect. Texans are counting on you to stand up for
them and require industry to follow the laws which protect our health and
resources. Essential to this is the pollution compliance history. Please do
your job for us." GHASP stated, "Having an effective compliance history database
will allow the public and state agencies to discover patterns that could help
pinpoint systematic issues within particular companies or industries. We believe
that understanding our history is the key to understanding our future."
The commission responds that a comprehensive compliance history is an effective
tool in enforcement of environmental regulations. The commission believes
that these rules meet the intent of the legislation, and will result in complete
and effective compliance histories, to the benefit of Texas and Texans. Although
the compliance history rulemaking does not directly place any additional requirements
upon regulated entities, the commission believes that, as intended, it will
provide an impetus for regulated entities to comply with other environmental
regulatory requirements. The commission further responds that it agrees regarding
the benefits of an effective compliance history database, and points out that
its new CCEDS is in the final stages of development. No change has been made
in response to this comment.
One individual stated, "Do not accept a rule that backslides from current
standards. The legislature clearly intended for TNRCC to create stronger,
not weaker, compliance standards." Another individual stated that "the enforcement
process has had to be used to correct problems after the fact that could have
been more easily, and prophylactically, dealt with in the permit process.
I understand that the Agency is proposing weakening some of the features of
compliance history consideration that the Legislature envisioned. I urge you
and the Agency to require complete and comprehensive review of compliance
history during permitting."
The commission disagrees that the rule "backslides from current standards."
The statute requires in TWC, §5.753(a), that the commission "develop
a uniform standard of developing compliance history." In order to achieve
this end, certain aspects of existing compliance history procedures or standards
will have to change. For instance, certain current media- or program-specific
requirements are not included in the adopted compliance history rule because
they are not otherwise required by statute or to maintain federal program
authorization, and because they are so media- or program-specific it is unreasonable
to include them in a "uniform standard." Ultimately, the uniform standard,
coupled with the requirements for classification and use of compliance history
which will be addressed in the second phase of rulemaking will provide for
"stronger, not weaker, compliance standards." The commission also envisions
that within the classification and use phase of compliance history rulemaking,
the opportunity to more proactively address problems through the permit process
will present itself; however, that is outside the scope of this phase of rulemaking.
No change has been made in response to this comment.
TPWA stated that it "believes that the development of a uniform standard
for evaluating compliance history based on specific factors is long overdue
and TPWA commends both the Legislature and the TNRCC for tackling this difficult
subject." TPWA and TxSWANA both further stated that they support the TNRCC's
efforts to develop "a uniform standard for evaluating compliance history based
on identified factors." Both commenters stated that they expect the development
of such a standard will help promote fairness in the consideration of compliance
history in future TNRCC decision-making. Both commenters stated their appreciation
of the opportunity to show support for many of the provisions the TNRCC has
drafted into this phase of compliance history rulemaking, and to make suggestions
for further refinement. Plano similarly commented that it appreciates the
efforts of the commission to establish uniform standards for evaluating compliance
histories in this phase of the compliance history rulemaking.
The commission appreciates these positive comments in response to the proposed
rule.
Huntsman commented regarding a uniform standard. Specifically, Huntsman
stated, "The proposed rule does not include a 'uniform standard for evaluating
compliance history'" which is clearly required by the statute. Huntsman stated
that "the legislation authorizing the proposed rule requires that certain
elements be made a part of any compliance history." Huntsman further commented
that the proposed rule lacks a "uniform standard" for evaluating the mandatory
requirement as well as the other components proposed by the agency, citing
as examples the failure to effectively distinguish between highly regulated
and complex facilities and less regulated and more simple facilities.
The commission disagrees with the comment, although it acknowledges that
TWC, §5.753(a) requires the development of a uniform standard of evaluating
compliance history. The proposed rule is, however, only the first phase in
developing this standard. House Bill 2912, §18.05(a) requires the commission
to establish the components of compliance history, by rule, no later than
February 1, 2002. This proposed rule establishes the components. This is the
first step towards developing the uniform standard, as it provides for the
same components across the board. House Bill 2912, §18.05(b) requires
that the commission, by rule, shall establish the standards for classification
and use of compliance history not later than September 1, 2002. This will
be accomplished through the second phase of rulemaking. Although TWC, §5.754(c)(2)
requires the commission to give "consideration to the number and complexity
of facilities owned or operated by the person," this is outside the scope
of the current rulemaking. It will be addressed in the second phase. No change
has been made in response to this comment.
Additionally, Huntsman stated that "the requirement of a uniform standard
is not a technicality. The regulated community is entitled to notice of the
standard by which their compliance history will be evaluated, and the standard
must be adequate to assure that the elements of a facility's compliance history
are placed into a context that is both fair and useful. At a minimum, the
standard should identify information that is relevant and meaningful to the
question of whether a facility is making a good faith effort to maintain and
upgrade its level of environmental compliance."
The commission agrees with this comment; however, what the commenter is
addressing is at least partially outside the scope of this rulemaking. This
is due to the fact that HB 2912 breaks the development of the compliance history
rule into two phases, and the current rulemaking is only the first phase,
dealing with components. The classification and use of compliance history
will be addressed through the next phase of rulemaking. The commission adds
that through both phases of the rulemaking, "notice" of the standard by which
compliance history will be evaluated will be provided. No change has been
made in response to this comment.
Huntsman stated, "Section 5.753 cannot be read in isolation. The agency
is developing a compliance history so that it can use it to rate members of
the regulated community... It is clear that any set of rules that purport
to rate a company's compliance history will publicly stigmatize the 'poor'
performers. Facilities should not suffer the regulatory and competitive disadvantage
that inevitably flows from a 'poor' rating unless that rating is based on
objective and fair criteria that were in place before the history was compiled.
Use of such a standard will insure that the ranks of 'good' and 'poor' companies
include both small and large sources and that the process of evaluation is
guided by standards that include both positive and negative information."
The commission responds that it is making every attempt to ensure that
the criteria is "objective and fair" by soliciting comments and suggestions
from the regulated community (industry, small businesses, environmental groups,
and the public) through stakeholder meetings, public outreach, and publication
of the proposed rule, while maintaining compliance with the enabling statutes.
To that end, HB 2912 requires the commission to look at historical enforcement
orders, consent decrees, court judgments, criminal convictions, and NOVs.
These components are already utilized by the commission in its permitting
and enforcement decisions. While rating a person's compliance history, which
is outside the scope of this rulemaking, new enforcement orders, consent decrees,
court judgments, criminal convictions, and NOVs remain an effective component
of commission decisions. No change has been made in response to this comment.
Huntsman commented that, "The absence of a uniform standard has a disproportionate
impact on major sources. Everyone has a stake in achieving and maintaining
attainment with federal air quality standards. However, it is beyond debate
major sources will have a documented compliance history that includes both
violations and enforcement actions because they get more regulatory and enforcement
attention as a matter of law and policy." Huntsman listed the following items
in support of its position. First, because major sources typically have environmental
departments and have made compliance reporting requirements a formal part
of their business operation, it can be expected that they will report planned
and unplanned releases of regulated air pollutants more frequently than other
regulated entities. Second, requirements in the wide variety of permits held
by major sources increase the frequency of mandatory reporting and inspection.
Third, regardless of whether a major source has had violations in the preceding
year, the air inspection protocol in the state of Texas is such that they
are subject to mandatory inspections. Fourth, the participation of major sources
in voluntary sampling and monitoring programs will increase the frequency
of inspections and improve the opportunity to detect and correct violations.
Fifth, inspections at major sources, because of their size and complexity,
can be expected to last longer than inspections of smaller and less complex
operations. Huntsman stated that it believes that "any uniform standard must
reflect the scrutiny given to major sources so that a company's final rating
will represent a genuine comparison with other, less intensely regulated,
sources."
Huntsman stated that, "The uniform standard should weigh violations and
enforcement actions against the number of emission points and other regulated
sources at the facility." Huntsman stated that chemical plants are complex,
integrated operations that continually process a high volume of potentially
hazardous material, and a goal of no violations presents many challenges.
Huntsman stated that with regard to diligence and commitment to compliance,
a small number of violations at a major source could be "less blameworthy"
than a similar number of violations at a facility manifesting and shipping
small quantities of hazardous waste. Huntsman stated that violations at a
major source are more likely to lead to an NOV or enforcement action because,
for one thing, "the margin for error has to be smaller at large operations."
The agency, in setting priorities, has already placed major sources at a higher
level of scrutiny and enforcement that smaller, more diffuse sources. The
second reason, according to Huntsman, why violations at major sources are
more likely to lead to NOVs or enforcement action is because "major sources
have more emission points and regulated facilities to be inspected." Huntsman
continued by stating that even so, if mandatory inspections were shifted away
from major sources, this does not mean that fewer violations would be found.
Huntsman went on to say that "major sources should not be punished twice,"
and that "any uniform standard must make a comparison between the wide variety
of regulated sources more meaningful." Huntsman suggested that the agency
consider weighing the number of violations and enforcement actions at a facility
against the number of regulated emission points and sources at the facility;
the number of points inspected during a mandatory inspection; the duration
of the mandatory inspection; and the frequency of mandatory inspections at
the facility.
What the commenter is addressing is outside the scope of this current rulemaking.
This is due to the fact that HB 2912 breaks the development of the compliance
history rule into two phases, and the current rulemaking is only the first
phase, dealing with components. The commenter raises several issues, including
major sources, complexity of a facility, number of emission points at a facility,
and the weight attributed to violations. These are all issues that will be
addressed in the second phase of compliance history rulemaking dealing with
the classification and use of compliance history. Although TWC, §5.754(c)(2)
requires the commission to give "consideration to the number and complexity
of facilities owned or operated by the person," and TWC, §5.754(c)(1)
requires the commission to determine whether a violation "is of major, moderate,
of minor significance," these things are outside the scope of the current
rulemaking. No change has been made in response to these comments.
Huntsman commented that, "The uniform standard should reflect agency discretion
in conducting inspections and bringing enforcement actions." Huntsman stated
that the agency allocates its enforcement resources among a wide spectrum
of regulated entities, and further, that even among the same class of regulated
entity, the "frequency and intensity of investigations will be influenced
by the availability of resources, agency priorities in different regions,
the skill and motivation of particular agency employees and other similar
factors." Huntsman stated that, "Any variation among the nonattainment regions
where major sources are located in either the number of violations found or
enforcement actions initiated is significant because the goal of attainment
is uniform and the proposed rule weights all violations and enforcement actions
equally." Huntsman, through quoting figures from the TNRCC Annual Enforcement
Report for FY 2000, stated that the ratio of NOVs to investigations in three
of the TNRCC regions where it states most of the major sources in nonattainment
areas are located are disproportionate. Specifically, Huntsman provided figures
stating that the ratio of NOVs to investigations is 4% for the Houston regional
office, 10% for the Beaumont regional office, and 21% for the Corpus Christi
regional office. Huntsman stated that, "Any evaluation of a major source's
compliance history should reflect the fact that some nonattainment regions
issue more NOVs per inspection/investigations than others to industries that
are similarly situated."
The commission responds by stating that the issues raised in this comment
are beyond the scope of this rulemaking. This is due to the fact that HB 2912
breaks the development of the compliance history rule into two phases, and
the current rulemaking is only the first phase, dealing with components. The
commission acknowledges that TWC, §5.754(c)(2) requires the commission
to give "consideration to the number and complexity of facilities owned or
operated by the person," and TWC, §5.754(c)(1) requires the commission
to determine whether a violation "is of major, moderate, of minor significance,"
but these will be addressed in the next phase of rulemaking. However, the
commission would point out several things with regard to the figures provided
by the commenter: 1) the commenter does not reflect that the Dallas/Fort Worth
(DFW) region and the El Paso region are also nonattainment areas within the
state, while in fact, although it may encompass many "major" air sources,
the Corpus Christi region does not encompass a nonattainment area; 2) only
certain counties within each of the four "nonattainment" TNRCC regions within
the state are "nonattainment areas," while the figures from the TNRCC Annual
Enforcement Report are for the entire region (not just those counties which
are "nonattainment") and therefore include information regarding all air-related
investigations performed and NOVs issued in those regions; 3) the ratio of
NOVs to investigations for the DFW and El Paso regions, using the same methodology
as the commenter, are 20% and 21%, respectively; and 4) the "variation" between
the ratios of NOVs to investigations in TNRCC regions cannot be attributed
solely to the "frequency and intensity of investigations" as "influenced by
the availability of resources, agency priorities in different regions, the
skill and motivation of particular agency employees and other similar factors."
In fact, it is certainly within the realm of possibility that the difference
between any meaningful ratios is due, at least in part, to both the number
of compliant entities within those regions as well as the level of compliance
with applicable regulations by the majority of regulated entities within those
regions. No changes have been made in response to this comment.
ICE stated, "Sixteen regions put TNRCC policy into practice, related to
inspections, investigations, NOV resolution at the regional level, etc. These
practices are not perfectly uniform region to region, and indeed may not be
uniform from inspector to inspector. To ensure fairness in the evaluation
of compliance histories, TNRCC should take measures to ensure that these practices
are as uniform as possible throughout the agency. Additionally, in dealing
with NOVs under Chapter 60, TNRCC should continue to allow 'informal resolution'
to alleged NOVs. As an example, a PST site may be given 14 days to correct
a deficiency and be re-inspected. This results in an alleged NOV 'going away.'
Such a circumstance should not result in a file entry to the site's compliance
history. Note that the 'alleged NOV' was not found to be without merit. Instead,
it was successfully rectified informally, at great cost and time savings to
the agency." ICE further stated that there "must be a 'due process' clause
developed in the Chapter 60 language, which allows a responsible person to
question, refute, and correct inaccurate data that TNRCC generates as part
of a compliance history. The person must be presented with the compliance
history and have the opportunity to review it."
The commission appreciates the commenter's concerns regarding the uniformity
of the regional offices putting TNRCC policy into practice. In order to address
such concerns, the Field Operations Division began putting a Standard Operating
Procedure in place in 1999. With regard to the comment concerning "informal
resolution" of NOVs, and based on the example provided by the commenter, the
commission interprets this to be a reference to verbal NOVs. Nothing about
the compliance history rule has any effect on the ability of investigators
to issue verbal NOVs, nor does the rule include verbal NOVs as a component
of compliance history; rather, the rule specifically makes reference only
to "written" NOVs. The commission would point out, however, that although
it appreciates the distinction made by the commenter that in its example,
the NOV was not found to be without merit, but rather was successfully rectified
(or resolved), this has no direct bearing on the rule. Simply put, a verbal
NOV that is addressed timely and adequately does not become a component of
an entity's compliance history. The distinction regarding "merit" only applies
to written NOVs, and the distinction will be made regarding those violations
found to be "without merit" (i.e., were cited in error by the TNRCC) versus
those rectified or resolved (i.e., actions were taken to correct the violation).
Resolved violations contained in a written NOV will be included in an entity's
compliance history.
The commission further responds that the process for securing an administrative
determination that an NOV is without merit does not require rulemaking, as
it is appropriately developed as a protocol or process. As such, the Field
Operations Division is providing a process for a person to contest the merit
of an NOV. First, additional language will be added to the regional NOV so
the recipient is aware of the first level of contact to contest a violation(s)
in an NOV. It will state, "If you have additional information that we are
unaware of, you have the opportunity to contest the violation(s) documented
in this notice. Should you choose to do so, you must notify the appropriate
Region Office within 10 days from the date of this letter. At that time, the
regional section manager will schedule a violation review meeting to be conducted
(within 21 days from the date of this letter OR specified date at specific
time). However, please be advised that if you decide to participate in the
violation review process, the TNRCC may still require you to adhere to the
compliance schedule included in the attached Summary of Investigation Findings
until an official decision is made regarding the status of any or all of the
contested violations." A summary of the process in its entirety follows. Initially,
if and when a person contacts the appropriate regional section manager (RSM)
to contest a violation (via facsimile, e-mail, hand-delivery or mail), it
should be done within ten days from the date of the NOV letter. At that time,
a violation review meeting (VRM) will be scheduled. However, in order to qualify
for a VRM, the person must have new information or documentation to support
a basis to contest the violation(s). If this is the case, then the VRM will
be conducted within 21 days or less from the date of the NOV letter. Meanwhile,
the status of the compliance schedule in the Summary of Investigation Findings
will be determined by the regional director (RD) on a case-by-case basis.
Next, after a VRM is conducted, the person will be notified, in writing, within
ten days after the meeting date if
any, none, or
all
of the violations are being rescinded and, if necessary, a revised
NOV will be issued under the section manager's signature. Next, the assigned
investigator will draft the VRM's minutes, so that each potential level of
review will know what was discussed. Also, copies of all relevant correspondence
will also be included along with the minutes and a checklist will be maintained
by the appropriate level of management through out the appeal process. Then,
the person has the option to pursue a contested NOV past the RSM by contacting
the regional director within seven days from the date of the RSM's notification
letter. At that time, the RD will review the RSM's decision for concurrence
or disagreement. If the RD disagrees with the RSM's decision, the RD will
coordinate a revised NOV to the regulated entity within ten days of the date
the person contacted the RD; if the RD agrees with the RSM's decision, then
the RD will communicate this to the person in writing within ten days of the
date the person contacted the RD. Upon receipt of a notification letter that
the RD concurs with the RSM's decision, the person has seven days from the
date of that letter to contact the field operations director (FOD) to contest
the violation(s) further. Then, the FOD will notify the regulated entity within
ten days from the date the person contacted the FOD, that final concurrence
with the RD and RSM has been determined or that the violation(s) will be rescinded
in the form of a revised NOV. The FOD may choose to conduct an additional
VRM. If the FOD elects an additional VRM, then, it will be scheduled within
21 from the date of the RD's letter. Within ten days after the VRM, the FOD
will notify the person that final concurrence with the RD and RSM has been
determined or that the violation(s) will be rescinded in the form of a revised
NOV. This is the final level of the Regional NOV Appeal Process. At this point,
if the regulated entity still contests some or all of the violations, it can
be taken up through the enforcement process. 30 TAC Chapter 80 already addresses
due process issues for enforcement actions. Additionally, as noted in the
rule, any NOV determined to be without merit will be removed from consideration
in compliance histories. The commission further responds that a person currently
has, and will continue to have, the ability to submit (additional) information
for consideration on behalf of a claim that information included in its compliance
history is inaccurate and/or erroneous. A regulated entity is free, and in
fact encouraged, to provide information for consideration to correct inaccuracies
at any time. However, due to the number of compliance histories that the agency
will be preparing, it is not feasible to send drafts of compliance histories
to regulated entities prior to their use by the agency. No changes have been
made in response to these comments.
One individual suggested that if the TNRCC is lacking the resources to
provide this kind of mandated service (compliance history) to the community,
it should "speak up." The commenter stated, "I (am) sure you will find the
support you need."
The commission appreciates the comment. However, the comment is outside
the scope of this rulemaking.
One individual commented, "If Texas were a nation, we would be the 7th
largest pollution producing nation in the world. What we do makes a tremendous
difference, not just for this state, but for the world."
The commission agrees that actions taken by the state of Texas have a large
impact, and responds that this is why these rules are being implemented. No
change has been made in response to this comment.
One individual commented, "The citizens of Texas want and deserve no less
than your dedication to ensuring that industry creates a compliance history
at each and every industrial/commercial site. Anything less is negligence."
The commission agrees with this comment in part. Specifically, the intent
of the proposed rule, as well as the next phase of rulemaking pertaining to
compliance history, is to provide for a compliance history specific to each
applicable regulated site in Texas. However, the commission has not proposed
that industry create compliance history reports for each site; rather, the
commission proposes that the agency shall prepare such reports. No change
has been made in response to this comment.
Four individuals commented regarding their concerns with air quality in
the state of Texas. Two specifically referenced concern with the quality of
air in the Houston area. One specifically referenced concern with the quality
of air in the Tyler area.
The commission responds that, while it appreciates the concerns raised
by the commenters, the comments are outside the scope of this rulemaking.
No change has been made in response to these comments.
ExxonMobil Refining commented, "It is important to note that the State
of Texas is embarking upon a new type of rulemaking that may have a significant
impact upon industry in this state. Of particular concern to companies with
more than one facility location, especially those with significant numbers
of facilities outside of the state, is the potential for negative impacts
on Texas facilities by historical events over which they had/have little participation
or control."
The commission agrees that this rulemaking may have a significant impact
upon industry in this state. Additionally, the commission acknowledges that
TWC, §5.574(c)(2) requires that the number and complexity of facilities
owned or operated be taken into account. However, the commission does not
agree that a person would not have participation or control of out-of-state
facilities. The commission proposes to develop compliance history based upon
the legal entity, not parent, daughter, sister corporations. That legal entity
does have control and influence over all its facilities. Additionally, this
issue will be addressed in more detail in the next phase of compliance history
rulemaking. No changes have been made in response to this comment.
TIP noted that TWC, §5.754 requires the consideration of the "number
and complexity of facilities owned or operated by the persons...." TIP stated,
"It is paramount to the success of the entire compliance history program that
the agency makes size and complexity a central consideration in all aspects
of both the definition and use rulemaking. Small facilities with few emission
or discharge points must be fairly compared to large facilities with numerous
emission or discharge points. More importantly, if size and complexity do
not play a central role in compliance history, large companies with multiple
facilities will be treated unfairly when compared to small companies with
one or only a few facilities. Simply put, compliance history must be compared
to entity size and complexity, especially when out-of-state violations are
considered a component. Size and complexity should be used to 'normalize'
all compliance history components for all entities. Without some way to incorporate
size and complexity into each component of an entity's compliance history,
the relative ranking of entities becomes arbitrary. Factors that could be
considered in determining size and complexity include, but are not limited
to: 1) location (attainment status); 2) the number of emission points; 3)
the number of waste streams; 4) the number of air permit conditions applicable
to a facility; 5) the number of wastewater permit parameters; 6) the degree
of required and voluntary emissions controls that are in place at a facility;
and 7) the number of environmental and health permits held by a facility.
Utilizing such factors will enable the TNRCC to fairly consider the compliance
history of one entity, relative to another. Size and complexity should be
addressed in this rulemaking and not deferred to the use rulemaking. Otherwise,
the definition of compliance history will not contain the components necessary
to effectively address size and complexity in the use phase." Additionally,
in general, BP endorsed the comments submitted by TIP.
What the commenter is addressing is outside the scope of this current rulemaking.
Although TWC, §5.754(c)(2) requires the commission to give "consideration
to the number and complexity of facilities owned or operated by the person,"
this is outside the scope of the current rulemaking. This is due to the fact
that HB 2912 breaks the development of the compliance history rule into two
phases, and the current rulemaking is only the first phase, dealing with components.
The second phase of compliance history rulemaking will deal with the classification
and use of compliance history, and this is where the size and complexity of
facilities will be addressed. The commission does not agree that failure to
address size and complexity in this current phase will result in an inability
to effectively address these issues in the next phase. No change has been
made in response to these comments.
ExxonMobil Refining stated, "In discussions with Commission officials,
ExxonMobil's representatives have consistently expressed their concern that
the compliance history program must incorporate data regarding the size and
complexity of a facility and related company facilities. For example, a small
single facility company with only 1000 possible emission points can not be
equally ranked against a company with many large in-state facilities each
containing tens of thousands of possible emission points. Add into this equation
large and numerous facilities in other jurisdictions across the country and
the justification of a system where the compliance history of the individual
facility carries much greater weight and which is balanced against the size
and complexity of the facility becomes imperative."
What the commenter is addressing is outside the scope of this current rulemaking.
Although TWC, §5.754(c)(2) requires the commission to give "consideration
to the number and complexity of facilities owned or operated by the person,"
this is outside the scope of the current rulemaking. House Bill 2912 breaks
the development of the compliance history rule into two phases, and the current
rulemaking is only the first phase, dealing with components. The second phase
of compliance history rulemaking will deal with the classification and use
of compliance history, and this is where the size and complexity of facilities
will be addressed. No change has been made in response to these comments.
TIP commented that "{c}onsistent with the underlying legislation, the TNRCC
has approached the implementation of HB 2912's compliance history requirements
in two phases... However, TIP would like to stress that the line dividing
the two phases of the TNRCC's compliance history initiative is not always
clear. As a result, to the extent possible, the agency should refrain from
deferring decisions on certain issues until the compliance history use rulemaking.
For example, although agency staff have stressed that size and complexity...
are issues to be addressed in the use rulemaking, decisions made during the
first phase will undoubtedly affect how those issues are approached in the
second phase." Additionally, in general, BP endorsed the comments submitted
by TIP.
The commission responds that, although it appreciates the commenter's concern
regarding deferring decisions on certain issues to the next phase of compliance
history rulemaking, what the commenter is addressing is outside the scope
of this current rulemaking. Although TWC, §5.754(c)(2) requires the commission
to give "consideration to the number and complexity of facilities owned or
operated by the person," this is outside the scope of the current rulemaking.
This is due to the fact that HB 2912 breaks the development of the compliance
history rule into two phases, and the current rulemaking is only the first
phase, dealing with components. The second phase of compliance history rulemaking
will deal with the classification and use of compliance history, and this
is where the size and complexity of facilities will be addressed. No change
has been made in response to these comments.
Vinson & Elkins stated, "The task of developing a uniform standard
for evaluating compliance history is complex. As a preliminary matter, the
phased approach to the compliance history rules does not provide an adequate
opportunity to comment on the Phase I rulemaking, Definitions and the Components
of Compliance History. It is extremely difficult to assess the definitions
without knowing how these definitions will be implemented. The preamble language
does not adequately address the variety of circumstances under which these
proposed definitions could be applied. The TNRCC should consider in the Phase
II rulemaking additional comments addressing the definitions proposed in the
Phase I rulemaking."
The commission responds that the statute breaks this rulemaking up into
two phases, requiring the definition or component phase to be in place by
February 1, 2002. The preamble language does not address the circumstances
under which the definitions could be applied because those issues will be
addressed in the second phase of rulemaking concerning the classification
and use of compliance history. The commission does not agree that it should
consider additional comments regarding components in the phase II rulemaking.
The section will not be reopened unless changes are proposed to that section.
However, the commission asserts that it is impossible to go forward with the
next phase of rulemaking without first establishing the components to work
from. No changes have been made in response to this comment.
TMRA commented that it "maintains that the best course of action to take
would be to combine the two phases of the rule. TMRA recognizes that the size
of this endeavor and the deadlines in the Sunset Bill make it difficult for
TNRCC to implement the compliance history portions of that Bill in a single
phase. Still, TMRA believes that the impact of the phase 1 rules will not
be known until the phase 2 rules are proposed. For example, phase 2 must include
detailed provisions governing (1) the process for securing an administrative
determination that an NOV is without merit, (2) the process for ranking an
entity as a poor, average, or high performer, and (3) the weight to be given
to the various identified components of compliance history in permit and enforcement
proceedings. TMRA firmly believes that these important processes are inextricably
intertwined with defining the components of compliance history and categories
of violations and, thus, could warrant amendments to provisions adopted in
phase 1 before all is said and done. Thus, TMRA requests a commitment by TNRCC
in the preamble to the final phase 1 rule that the phase 1 rule provisions
will be re-opened, if necessary as part of phase 2."
The commission responds that it appreciates the recognition of the difficulty
of implementing the compliance history rulemaking in a single phase, and further
appreciates the concern that it is difficult to assess the impact of the phase
I rules prior to the proposal of the phase II rules. Further, the commission
agrees that the phase II rulemaking will address the process for ranking performers,
and for weighting the components of compliance history. However, the commission
does not agree that phase II must include in rule the "process for securing
an administrative determination that an NOV is without merit." Rather, the
development and implementation of this process is outside the scope of this
rulemaking, as it is appropriately developed as a protocol or process. As
such, the Field Operations Division developed a process as previously discussed
in this preamble. Additionally, the commission does not agree that it should
consider additional comments to this phase of rulemaking in the phase II rulemaking.
The section will not be reopened unless changes are proposed to that section.
However, the commission asserts that it is impossible to go forward with the
next phase of rulemaking without having a set list of components to work from.
No changes have been made in response to these comments.
TMRA commented, "While it is too complex to resolve as part of this phase
1 rulemaking, TMRA believes TNRCC should confirm in the preamble to the final
phase 1 rule that the phase 2 evaluation criteria will take into account the
additional compliance burden that some highly regulated entities carry. Many
entities have to dedicate significantly more resources to environmental compliance
than others of different size or industrial sector. For example, if a large
and heavily regulated entity has a hundred thousand points of compliance across
the State, having five NOVs in a single year is much less significant than
if a small, relatively unregulated entity with only eight point of compliance
has five NOVs in a single year. TMRA trusts that this issue will be recognized
by TNRCC in the preamble to the phase 1 rule and addressed in the phase 2
rule. Toward that end, TMRA encourages TNRCC to begin developing a system
which is based on the number of work hours/days/years per compliance requirement
without incident. This could be one way to reward heavily regulated industries
that are committed to environmental excellence and not punish them disproportionately
for relatively infrequent compliance problems. If the TNRCC intends to rely
upon SIC codes to determine the complexity of an entity's environmental compliance,
TMRA trusts that the size and complexity of aggregate, clay, and coal/lignite
mining activities will lead TNRCC to rank those industries' SIC codes in the
highest tier of complexity."
The commission agrees with this comment in part, but responds that it is
outside the scope of this phase of compliance history rulemaking. However,
the commission confirms that the phase II compliance history rulemaking will
give "consideration to the number and complexity of facilities owned or operated
by the person," as required by TWC, §5.754(c)(2). No change has been
made in response to this comment.
TIP stated that "it is important for the TNRCC to consider issues related
to performance classifications in the current rulemaking and not defer all
discussion on these critical issues until a final compliance history definition
rule has already been promulgated. The compliance history component process
is related to performance classification. New TWC §5.754(b) requires
the agency to distinguish among poor, average, and high performers. However,
a procedure for the 'rehabilitation' of poor performers is not addressed in
the proposed rules. 'Poor' performers will be actively engaged in projects
to improve their performance and the lack of a defined rehabilitation process
will hinder such improvement efforts. At a minimum, the definition rule should
provide a mechanism to track an improving trend in compliance components within
a given five (5) year period." Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission disagrees with the comment. The commission recognizes that
the compliance history components are related to performance classification,
and responds that it is very specifically implementing this rulemaking in
accordance with the schedule and separation of phases presented in applicable
statutory language. The performance classification is clearly a part of the
phase of compliance history rulemaking dealing with the classification and
use of compliance history, which is the next phase. The commission contends
that the written compliance history is the mechanism to track or detect trends
over the five-year period. All the components that exist regarding a site
will be captured in a document that the commission will review prior to specific
decisions covered under HB 2912. No changes have been made in response to
these comments.
BP stated, "The TNRCC's proposed compliance history rulemaking will be
used as a tool to measure environmental performance. Such a tool should be
balanced to include positive attributes and consideration for facility complexity."
The commission agrees with this comment. The commission has proposed "positive
attributes" through this proposal, specifically in the proposed components
of compliance history in §60.1(b)(8) - (12). Additionally, the commission
acknowledges that TWC, §5.574(c)(2) requires that the complexity of a
facility be taken into account. However, that issue will be addressed in the
next phase of compliance history rulemaking. No changes have been made in
response to this comment.
Jones Day suggested "including in the definition and/or use sections of
the rule language regarding the record that must be created by the agency
while building a compliance history. The compliance history will be used to
classify companies and facilities; therefore, building a framework for 'final'
agency decisions is important."
The commission interprets this comment to suggest that the actual report
or summary which will be prepared for a person's compliance history should
be described in rule, either in this phase of rulemaking, or in phase II.
The commission responds that this is outside the scope of this rulemaking,
because it would be impossible to describe such a document without having
the classification and use rules in place. No change has been made in response
to this comment.
TMRA stated, "The concept sheet handed out at the October 30, 2001 stakeholders'
meeting regarding phase 2 of the compliance history rules states that TNRCC
'is considering the utilization of its Enforcement Initiation Criteria guidance
as the basis for determining whether a violation falls into a major, moderate,
or minor designation....' TMRA believes this is appropriate and encourages
TNRCC to also harmonize the rule with the Penalty Policy to the extent possible.
TMRA believes that TNRCC should strive for as much consistency across its
enforcement program as possible and, toward that end, the categories used
in the compliance history rules should be harmonized with the Initiation Criteria
and Penalty Policy as much as possible. The initial draft proposed phase 1
rule that was filed with the Chief Clerk included definitions of 'Major, Moderate,
and Minor' NOVs. TMRA understands that TNRCC has since decided to hold off
on defining 'Major, Moderate, and Minor' categories of NOVs in the phase 1
rulemaking. Although further comments are likely to be submitted in the phase
2 rulemaking (once the classifications are formally proposed and the significance
of the classifications is clear)," TMRA made several "initial suggestions
for TNRCC to consider as they draft the proposed phase 2 rules."
The commission responds that these comments are outside the scope of this
phase of compliance history rulemaking. The commission further states that
the issues raised, to the extent applicable, will be dealt within the second
phase of compliance history rulemaking. Specifically, TWC, §5.754(c)(1)
requires the determination of whether a violation is of major, moderate, or
minor significance, and as noted by the commenter, this will be addressed
in phase II.
§60.1(a), Applicability
Jones Day and TIP commented regarding proposed §60.1(a). Jones Day
stated that the commission should provide a definition of "person" for the
proposed rule. Specifically, Jones Day stated, "The agency did not propose
a definition of 'person' for purposes of this rule, noting in the preamble
that TNRCC would use the generic definition found in 30 TAC Chapter 3. Just
as TNRCC found cause to create a specific definition of 'permit' for this
chapter, we believe that a specific definition of 'person' should also be
established. The generally applicable definition of person is: An individual,
corporation, organization, government or governmental subdivision or agency,
business, trust, partnership, association, or any other legal entity. 30 TAC §
3.2(25). This broad definition could mean that the compliance history of a
current owner/operator of a facility might include the compliance history
of other 'persons' arguably related to the facility, such as subsidiaries,
joint venture partners associated with other operations, parent corporations
or holding companies. TNRCC recognizes this concern and apparently agrees
that the compliance history should be that of the current owner/operator,
when it wrote: The commission has determined that for purposes of developing
compliance histories, 'ownership' would
only include
the entity filing the permit application
, under enforcement, being
inspected, or applying for participation in an innovative program, as defined
by its legal name. For example, a parent, sister, or daughter corporation
related to the legal entity would
not
be included.
This would change current agency practice." (Emphasis added.) Jones Day stated,
"We agree with TNRCC's conclusion. However, we do not believe that the issue
is properly or adequately resolved through preamble language, particularly
where the Agency itself recognizes that this changes current Agency practice.
A definition, along with additional preamble language could clarify that,
for purposes of this rule, only the compliance history of the current owner/operator
would be relevant, not that of entities that might have a relationship with
the current owner/operator (e.g., parents, subsidiaries, joint venture partners)."
Similarly, TIP commented that the term "person" should be defined similarly
to the discussion of "ownership" in the proposal preamble, and that if the
commission intends to defer consideration of the definition of "person" to
the upcoming compliance history use rulemaking, it should state this in the
preamble to the final rule. Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission disagrees that it should provide a definition of "person"
for this rule. The commission has determined that the definition of "person"
as provided for in existing 30 TAC §3.2(25) is both adequate and appropriate
in relation to the compliance history rules. If the definition was intended
to include parent, sister, or daughter corporation, or any other related entities,
it would expressly state this. The fact that it does not include such language,
coupled with the reinforcement of this concept in this adoption preamble,
is sufficient. The commission further adds that it's basis for creating a
specific definition of "permit" for this chapter is based on the fact that
the enabling statute, in TWC, §5.752(3), defines "permit" as specified
in this rule. No changes have been made in response to these comments.
Regarding proposed §60.1(a), ExxonMobil Refining recommended that,
"{i}n considering the applicability of a facility's compliance history, that
facility history should be tied to a single air account number, Texas Water
discharge number, or hazardous waste generator number. This will allow the
commission to place proper weight to violations attributable to the facility/applicant
while placing violations attributable to other facilities in other jurisdictions
in a lower weighted classification."
The commission disagrees with this comment. The commission has determined
that it is appropriate to perform a multimedia compliance history review based
on the fact that the applicable statutory language repeatedly refers to the
compliance history of a "person." It does not say "for a person, by media
or by permit." This implies an "encompassing" compliance history. Further,
the statute requires that components of compliance history include enforcement
orders, court judgments, and criminal convictions for environmental violations
within the state of Texas, as well as enforcement orders, court judgments,
and criminal convictions for environmental violations in other states. Again,
it does not say "orders, etc. concerning the permit which is the subject of
the permit application, enforcement action, investigation, etc." What the
commenter suggests would limit the compliance history determination to the
instant site, permit, and program area, while the statute references "person"
(as opposed to site), and states that all regulated sites, inside and outside
the state of Texas, must be taken into account. No changes have been made
in response to this comment.
ICE, 7-Eleven, and TCPA commented with regard to proposed §60.1(a),
(adopted as §60.1(a)(2)), that the term "permit" is intended to include
only those agency actions which require a "decision" by the commission, or
"final agency actions," meaning that "an agency decision is made based on
factual information and findings in an administrative record that may be appealed,
and is ultimately subject to judicial review." The commenters concluded that
agency "authorizations" should be limited to those that will result in final
agency action, and ICE recommended that proposed §60.1(a) should be revised
in part to read: "For the purposes of this chapter, the term 'permit' means
licenses....or other forms of authorization which constitute final agency
action." 7-Eleven and TCPA recommended that the language should read, "...
or other forms of authorization which, upon issuance, constitute final agency
action."
The commission responds that the definition of permit as provided for in
adopted §60.1(a)(2) is taken directly from TWC, §5.752(3). The language
in the statute does not provide any limitations as suggested by the commenters.
Further, the language at TWC, §5.754(e) and (e)(1), which will be implemented
by rule in phase II of the compliance history rulemaking, states, "The commission
by rule shall provide for the use of compliance history classifications in
commission decisions regarding: (1) the issuance, renewal, amendment, modification,
denial, suspension, or revocations of a permit." It provides no limiting language
that this only applies to "final" agency action. Rather, the commission has
determined that it is appropriate to distinguish between what it describes
in the proposal preamble as "decision" versus "no decision" processes in order
to clarify that there are in fact many types of submittals required which
bear the names of the types of authorization specified in the definition of
permit provided by the statute which do not constitute any decision-making
on the part of the agency upon receipt. However, some of the authorizations
that fall under the "decision" process as described for purposes of this rulemaking
may not constitute decisions on "final agency action." No change has been
made in response to this comment.
ICE, 7-Eleven, and TPCA commented regarding proposed §60.1(a), stating
that the definition of the term "permit" in the proposed rule (adopted §60.1(a)(2))
is overly broad in that it covers practically all official actions by the
TNRCC. "The key/operative rule language which limits the forms of agency 'permitting'
actions that require use of compliance history is the" sentence which states
that: "'This rule only applies to forms of authorizations... that require
some level of notification to the agency; review; and approval or response.'"
(This language is found in adopted §60.1(a)(3)). ICE stated that it believes
that agency review should be specifically termed either "technical review"
or "substantive review," as these terms imply some further study and evaluation
of the submittal beyond date-stamping and generating a form letter in response.
7-Eleven and TPCA strongly recommended that, at a minimum, the commission
should "delete or modify the language 'or response' as used in Section 60.1(a).
This sentence offers three qualifiers to narrow the scope of 'authorizations'
which will be made after review of compliance history: those which involve
(i) some level of notification to that agency; (ii) review; and (iii) approval
or response. However, the language 'or response' is so broad and ambiguous
that the category of covered authorizations is limited only by clause (i)
and (ii), i.e., authorizations for which 'notification' is given to the agency
and for which 'review' is made. If, as stated in the draft preamble, the goal
of the rule is to limit the applicability of the rule to those authorizations
involving a 'decision' by the agency, then it seems clear that further definition
is needed to narrow the universe of decisions beyond those which involve a
'notification' and 'review.' We would recommend that the following language
be inserted after 'notification to the agency...':"
notification to the Commission, and which, after receipt by the Commission,
requires the Commission or Executive Director to make a substantive review
of and approval or disapproval of the authorization required in the notification
or submittal. For the purposes of this rule, "substantive review of and approval
or disapproval" means action by the Commission or the Executive Director to
determine, prior to issuance of the requested authorization, and based on
the notification or other submittal, whether the person making the notification
has satisfied statutory or regulatory criteria that are prerequisites to issuance
of such authorization. The term "substantive review or response" does not
include confirmation of receipt of a submittal.
ICE commented that it generally agrees with the discussion of "no decision"
authorizations in the proposal preamble. However, ICE continued by saying
that there are "a number of other 'no decision' examples or occurrences which
TNRCC may not be inclined to drop out of compliance history consideration,
if the proposed language stands." ICE and AECT proposed the following revisions
to proposed §60.1(a), (adopted as §60.1(a)(3)). First, ICE proposed
that the underlined verbiage be added to the sentence, "....this rule only
applies to forms of authorization, including temporary authorizations, that
require some level of notification to the agency;
technical
review
by the agency
; and
approval or response." Subsequent to this sentence, ICE and AECT both recommended
that the following language be added.
This rule does not apply to situations in which a person informs the commission,
as required by a rule, that it is engaging in a certain regulated activity
for which there is no specific authorization required, such as changes to
qualified facilities under 30 TAC §§116.117 and 116.118. This rule
also does not apply to activities that are authorized by rule for which notification
may or may not be required, but no commission response is required for the
site to be authorized. Examples of such activities include, but are not limited
to, the management of waste for which a notification is required by 30 TAC §
335.6; underground or aboveground storage tanks registered under 30 TAC §
334.7 or 334.127; emissions authorized by Chapter 116, Subchapter F of this
title (relating to Standard Permit), where no written site approval is required;
and wastewater or stormwater discharge notices of intent, where no written
approval is required....." AECT further proposed that "emissions authorized
by 30 TAC Chapter 106, where no written site approval is required" be included
prior to the recommended language regarding "emissions authorized by Chapter
116...
The commission responds that the definition of permit as provided for in
adopted §60.1(a)(2) is taken directly from TWC, §5.752(3). It provides
no limiting language that this only applies to "final" agency action or to
"technical reviews." Rather, the commission has determined that it is appropriate
to distinguish between what it describes in the proposal preamble as "decision"
versus "no decision" processes in order to clarify that there are in fact
many types of submittals required which bear the names of the types of authorization
specified in the definition of permit provided by the statute which do not
constitute any decision-making on the part of the agency upon receipt. However,
some of the authorizations that fall under the "decision" process as described
for purposes of this rulemaking may not constitute decisions on "final agency
action." With regard to the suggestion to add the "technical review by the
agency," the commission responds that the use of the word "technical" is not
appropriate, since there are different levels of "technicality" of the review
of different authorization requests, and to include the word invites confusion
and disputes. Further, some of the reviews conducted on requests for authorization,
and which the commission has determined the authorizations fall into the "decision"
process, do not actually require a "technical" review in truest sense. The
commission also had determined that it is not necessary to include "by the
agency" as this is implicit in the language already provided. Additionally,
the discussions regarding what authorizations do apply, versus those that
do not, is spelled out, in fairly generic terms, in adopted §60.1(a)(3)
and (4). The specific examples suggested by the commenters are more appropriately
addressed in the preamble, and were, in fact, included in the proposal preamble,
as well as in the adopted preamble. To present a partial list within the rule
invites confusion and possible misinterpretation. To attempt to provide an
all-encompassing list of agency authorizations which fall into either the
"decision" or "no decision" categories would also create problems, with either
an erroneous oversight or omission, or authorizations changing or being added
or deleted. The commission agrees that the proposed language needs clarity
and has modified the text at §60.1(a)(3) to read: With respect to authorizations,
this chapter only applies to forms of authorization, including temporary authorizations,
that require some level of notification to the agency, and which, after receipt
by the agency, requires the agency to make a substantive review of and approval
or disapproval of the authorization required in the notification or submittal.
For the purposes of this rule, "substantive review of and approval or disapproval"
means action by the agency to determine, prior to issuance of the requested
authorization, and based on the notification or other submittal, whether the
person making the notification has satisfied statutory or regulatory criteria
that are prerequisites to issuance of such authorization. The term "substantive
review or response" does not include confirmation of receipt of a submittal.
Vinson & Elkins commented, with regard to proposed §60.1(a), (adopted
as §60.1(a)(4)), that it agreed with the proposal that actions related
to emissions banking and trading, executive director actions regarding remediation
of spills or other contamination, and minor amendments, should not be subject
to the compliance history review requirements.
The commission appreciates this positive comment in support of the proposed
rule.
Concerning proposed §60.1(a), (adopted as §60.1(a)(4)), ExxonMobil
Refining recommended "that the TNRCC add to the list of permit actions to
which this rule does not apply permits by rule and standard permits. Exclusion
of these types of permits will allow the TNRCC to focus it's limited resources
on issues with greater potential to affect the environment while allowing
industry to operate within the regulations in an efficient manner. ExxonMobil
believes that this exclusion can be included in the rule and is a logical
interpretation of the statutory language as these permit types are generally
claimed through notification requirements and do not require up-front action
by the agency. Similarly, TIP stated that the "compliance history requirements
of HB 2912 should not be applicable to permits by rule or standard permits.
This is consistent with the underlying legislation which requires the agency
to utilize compliance history when 'making decisions' regarding various agency
actions. Activities that are authorized by rule and standard permit are not
based on any agency decisions. As a result, the compliance history requirements
of HB 2912 should not be associated with permits by rule or standard permits."
Additionally, in general, BP endorsed the comments submitted by TCC.
The commission disagrees with this comment. TWC, §5.752(3), defines
"permit" to include a "license, certificate, registration, approval,
Regarding proposed §60.1(a), (adopted as §60.1(a)(4)), BP commented,
"TNRCC indicates this proposal is not subject to permit actions such as 'voluntary
permit revocations; minor amendments and nonsubstantive corrections to permits...'
Similarly, TNRCC should consider deleting applicability for permits by rule
(PBR), as well. PBRs meet certain insignificance thresholds; therefore, no
decision, or little if any review, is required on the part of the TNRCC. Therefore,
PBRs, like minor amendments, should not be subject to this rule. This is consistent
with the underlying legislation which requires the agency to utilize compliance
history when 'making decisions' regarding various agency actions."
BP further commented that "Class II modifications, like Class I solid waste
modification, should not be subject to this rulemaking because these changes
do not constitute substantive changes in design or management practices in
the permit.... Furthermore, Title V permits, which already require independent
certification of compliance, should not be subject to this rulemaking. Title
V is a 'codification' of existing requirements rather than an agency approval
of substantive 'new' requirements. Therefore, these federal permits should
not be subject to these provisions."
The commission agrees that most permits by rule should be excluded from
the compliance history review requirement because they do not require commission
approval. However, there are permits by rule that require a written site approval
before construction and those permits by rule will be subject to compliance
history review. Additionally, in the SECTION DISCUSSION of the proposed rule
preamble, the exclusion from compliance history review for permits by rule
that do not require written site approval is discussed. The commission disagrees
with the comment that Class 2 modifications should not be subject to this
rulemaking. The commission acknowledges that Class 2 modifications apply to
changes a permittee needs to make to respond to technological advancements
and new regulations and do not substantially change design specifications
or management practices. However, unlike minor amendments or Class 1 modifications,
Class 2 modifications are not limited to changes which maintain or improve
the capacity of a facility to protect human health or the environment. Class
2 modifications also require a public notice and comment prior to final action
and require the notice to state that the permitee's compliance history is
available from the agency. Additionally, it is the commission's current practice
to require a compliance history for Class 2 modifications. For these reasons,
no change has been made in response to this comment. Finally, the commission
disagrees with the comment that the Title V permits should not be subject
to compliance history review. The statute does not exclude federal operating
permits from the requirement. The annual compliance certification requirement
is not equivalent to a compliance history review. The commission proposes
no changes to the rule in response to these comments.
7-Eleven, ICE, and TCPA all commented regarding the language of proposed §60.1(a),
as found in adopted §60.1(a)(4). 7-Eleven and ICE stated that it should
be supplemented or revised to further clarify which agency "authorizations"
do not require "agency review and approval or response." ICE stated, "TNRCC
is clearly wanting to avoid taking 'underground or aboveground storage tanks
registered under 30 TAC §334.7 or §334.127' into the compliance
history 'generation' process, until a compliance inspection is done and maybe
then only if deficiencies are found. This is probably due to the large number
of PST sites and the time commitment by TNRCC staff required for compliance
history generation. Clarification should be made in the rule, so that it is
clear at what point in time or under what circumstances a compliance history
is needed or determined for a PST location. Regarding facilities regulated
under Chapter 334, it is fairly clear that construction notifications will
not be part of a compliance history, as they do not undergo significant agency
review. However, the annual certification of compliance must undergo some
technical review, or the agency is not assuring that those certifications
are complete and accurate. The version of the rule under consideration does
not indicate whether verbal notification to a responsible person that their
compliance certification form is incomplete constitutes review and response
by the agency."
7-Eleven and TCPA also commented regarding "ambiguity about other types
of UST-related submittals" other than underground storage tank (UST) and aboveground
storage tank (AST) registrations, "which result in an agency response or approval,
such as the annual certification of compliance, which results in issuance
of notice by TNRCC that the annual certification has been made. Because this
rule creates a mandatory duty for TNRCC to consider compliance history prior
to taking certain agency actions, failure to do so could be challenged by
an 'affected party' in an administrative appeal or state court suit against
TNRCC alleging failure to consider compliance history in an agency decision.
Such a suit could be brought to challenge issuance of the TNRCC confirmation
of UST operators' annual certifications. UST operators cannot receive fuel
deliveries without having first received a certification from the TNRCC confirming
the receipt by the TNRCC of annual compliance certifications by the UST operators.
Unless the rule is further clarified, it is forseeable that fuel deliveries
for facilities which operate USTs could be interrupted during an administrative
or civil judicial challenge to issuance of the TNRCC certification. Such a
challenge could allege, under the current wording of the rule, that the TNRCC
confirmation of certification requires consideration of compliance history
because it {is} the certification that, on its fact, is an 'authorization'
that 'requires some level of notification to the agency; review; and approval
or response.'"
The commission appreciates the positive response to the proposal, and further
responds that the examples provided in the proposal preamble were just that,
examples, and were not intended to provide an all-inclusive list. Rather,
the intention is not to include an exhaustive list in the rule, for many reasons.
First, the commission has jurisdiction over many programs, with many different
types of authorizations. To try to incorporate an exhaustive list by rule
leaves the commission open to a situation where some type(s) of authorization
are erroneously overlooked or omitted. Further, new programs and associated
authorizations can be added to the commission's area of jurisdiction, and
existing programs can be modified or deleted. An exhaustive list of authorizations
in the compliance history rules would require that the compliance history
rules be constantly updated to stay current with other rules. With regard
to the issue of petroleum storage tank (PST) registrations being excluded
from the compliance history generation process, while the commission agrees
that the PST regulated community is large, the reason for excluding PST registrations,
as stated in the proposal preamble, is that they are notifications required
to be submitted by the regulated entity which do not require any approval,
review, or response on the part of the agency (in other words, they fall under
the "no decision" process as described). Petroleum storage tank registrations
are rather an "after-the-fact" notice that PSTs have already (within the preceding
30 days) been installed, modified, or removed from service. With regard to
the PST annual certifications, the commission responds that they also do not
require any approval, or authorization to operate, on the part of the agency
(again, falling under the "no decision" process as described). Certainly the
contents of the annual certifications will be verified at the time agency
investigations are performed, but to expect that the agency would have to
independently verify that the certification is accurate at the time it is
submitted would defeat the whole concept behind the self-certification program.
In fact, 30 TAC §334.8(c)(3)(C) states, "The agency's issuance of a delivery
certificate for an UST(s) does not constitute agency certification or affirmation
of the compliance status of the tank(s) in question with agency UST technical
and/or administrative requirements, and this issuance does not preclude the
agency from investigating these tanks and pursuing enforcement actions under
the Texas Water Code when apparent violations are discovered." If, upon investigation,
it is determined that the certification was "inaccurate," an NOV would be
issued containing both the technical violation(s) and the failure to submit
accurate information, and subsequent enforcement action could be initiated,
ultimately resulting in a commission enforcement order. The violations contained
in such NOVs and enforcement orders would be included in subsequent compliance
histories (during the next five years) for that person for use in determining
whether announced investigations can be conducted, in "decision process" authorization
decisions, in subsequent enforcement actions, and in determinations as to
whether the person can participate in an innovative programs. Additionally,
a verbal notice that a PST annual certification (or any other required document
submitted) is not complete does not constitute the "decision process" review
and response contemplated in the proposal preamble. The commission recognizes
that UST operators must make available to a common carrier a valid, current
delivery certificate before delivery of a regulated substance into the UST(s)
can be accepted. However, the commission asserts that, even if an administrative
or civil judicial challenge to issuance of the certification was raised for
any reason, deliveries would not have to stop until such time as the certification
was actually revoked. No changes have been made in response to these comments.
ICE stated that proposed §60.1(a) "should be revised to provide that
violations that are voluntarily disclosed under the Texas Environmental, Health
and Safety Audit Privilege will not be considered a part of an entity's compliance
history. The purpose of that Act is to encourage voluntary compliance with
environmental laws. Entities will be discouraged from using the Act to voluntarily
disclose violations if such violations will be included in their compliance
history."
The commission disagrees with this comment. Violations disclosed under
the Texas Audit Act are included under §60.1(c)(7) and as required by
the Act will be noted as voluntarily disclosed. No change has been made in
response to the comment.
AECT commented regarding proposed §60.1(a), regarding what is now
adopted §60.1(a)(4), stating that it agrees with the TNRCC's discussion
of "no decision" processes in the proposal preamble, and that it generally
agrees with the examples of such authorizations provided. However, AECT requested
that this language "be revised to include additional language relating to
the definition and examples of 'no decision' processes." AECT added, "One
example the TNRCC provides ... of a 'no decision' process is 'the on-site
management of nonhazardous waste for which a notification is required by 30
TAC §335.6.' That description is too narrow and should be modified to
include management of any wastes, whether hazardous or non-hazardous, for
which notification is required under §335.6, but no permit is required.
This is because all notifications under §335.6 constitute situations
'in which a person informs the TNRCC... that it is engaging in a certain regulated
activity, which the TNRCC defines ... as being a type of 'no decision' process.
In addition, the reference to 'waste discharge notices of intent under 30
TAC Chapter 205, where no written approval is required' needs to be revised
to cover all wastewater or stormwater notices of intent, including those required
by the Multi-Sector Stormwater General Permit. Further, AECT suggests that
notification of used oil handler activities under 30 TAC §§324.11
- 324.14 should be provided as an example of a 'no decision' process."
The commission appreciates the positive comment in support of the rule.
The on-site management of nonhazardous waste for which a notification is required
by §335.6 is listed as one example of a "no decision" process. The agency
acknowledges there could be others, including the hazardous waste example
noted in the comment. The list of examples in the proposal preamble was not
intended to be a comprehensive list of authorizations meeting the criteria
of a "no decision" process, for many reasons. First, the commission has jurisdiction
over many programs, with many different types of authorizations. To try to
incorporate an exhaustive list by rule leaves the commission open to a situation
where some type(s) of authorization are erroneously overlooked or omitted.
Further, new programs and associated authorizations can be added to the commission's
area of jurisdiction, and existing programs can be modified or deleted. An
exhaustive list of authorizations in the compliance history rules would require
that the compliance history rules be constantly updated to stay current with
other rules. The commission agrees that there are notifications of hazardous
waste management required under §335.6 where no permit or agency approval
is required which also would be "no decision" processes. Additionally, with
regard to the commenter's request for clarification on "waste discharge notices
of intent under 30 TAC Chapter 203, where no written approval is required,"
the commission responds that the term "wastes" is the term used in Chapter
205 and it does cover both stormwater and wastewater discharges. Additionally,
this has been clarified in the SECTION DISCUSSION of this adoption preamble,
by adding the parenthetical statement as follows: "...and waste discharges
(including stormwater and wastewater) notices of intent under 30 TAC Chapter
205..." The commission also agrees that used oil registrations would be an
example of a "no decision" process. For these registrations, the agency verifies
that financial assurance is adequate and that required information is submitted;
however, agency review and approval is not required. No changes have been
made in response to this comment.
Plano commented regarding proposed §60.1(a). Plano expressed concern
that the term "minor," as it is used in proposed §60.1(a), now adopted §60.1(a)(4)(C),
with regard to proposed exceptions to the use of compliance history for minor
amendments and modifications to permits, is not defined. Plano expressed concern
that this leaves the determination as to whether an amendment or modification
is "minor" to a "purely subjective opinion," and suggested that the term "minor"
be defined so as to remove any subjectivity and ensure equal treatment of
parties.
The commission agrees that clarification of the rule is appropriate. The
term "minor amendment" is already defined in the commission's rules. Specifically,
30 TAC §305.62 defines "minor amendment" and "major amendment" as those
terms relate to water and waste permits and 30 TAC §305.62 and §305.72
define "minor modifications" as those terms relate to TPDES and UIC permits.
Although the commission's air program does not have a definition of "minor
amendments," that concept is captured in certain air permitting actions. For
example, minor permit revisions to federal operating permits would not be
subject to compliance history review. Further, in the new source review program,
permit amendments that meet the provisions of THSC, §382.056(h) (implemented
in 30 TAC §39.402) would also be excluded from the requirements of this
chapter. The commission believes that it is appropriate to exclude minor permit
revisions under Chapter 122 because these revisions, consistent with 40 CFR
Part 70, are not considered significant. Similarly, the NSR permit amendments
addressed by §39.402(a)(1) - (3) are those that authorize de minimis
or insignificant increases in air emissions. To clarify this, the commission
has added language at adopted §60.1(a)(4)(H) stating that this chapter
does not apply to "air quality new source review permit amendments which meet
the criteria of 30 TAC §39.402(a)(1) - (3) and minor permit revisions
under 30 TAC Chapter 122."
TCONR commented that the first sentence of proposed §60.1(b), now
in adopted §60.1(a)(6), which states that the "components of compliance
history shall apply to an action taken by the agency on or after February
1, 2002," is confusing and unnecessary. TCONR asked, "Does the agency mean
that only enforcement actions taken after February 2002 are included as components
of compliance history? ... {t}hat was rejected by the legislature. We do not
believe the agency intends this result. The preamble does not specifically
clarify this provision, however. We request that it either be stricken or
that the adopted rule clarify that the agency does not intend to limit the
components of compliance history to enforcement actions taken by the agency
after February 1, 2002." Similarly, BP and TCFA stated, "In the introductory
paragraph of §60.1(b), TNRCC indicates the components specified in this
chapter 'apply to an action taken by the agency on or after February 1, 2002.'
Because this statement is written into the introductory paragraph, the reader
assumes the thirteen components are all triggered on a February 1, 2002 date.
If this is not the case, TNRCC should rewrite this section for clarity."
The commission responds that this language was taken from HB 2912, §18.05(i),
which states, "The changes made by this Act in the definition of compliance
history apply to an action taken by the Texas Natural Resource Conservation
Commission on or after February 1, 2002. An action taken by the Texas Natural
Resource Conservation Commission before February 1, 2002, is governed by the
law in effect on the date the action is taken, and the former law is continued
in effect for that purpose." The commission recognizes that the proposed language
has proven to be confusing, particularly with regard to the use of the term
"an action taken by the agency." The "action" does not refer to the "actions"
which constitute the components of compliance history included in this subsection
in paragraphs (1) - (13); rather, it refers to the "actions" taken by the
agency which require the development and consideration of a compliance history
as part of the decision-making process, as specified in subsection (a) of
this section. In other words, the statement is intended to reflect that the
definition of compliance history as provided by Chapter 60 (i.e., the components,
and further, meaning these components as opposed to the components specified
in existing 30 TAC Chapters 116 and 281 and the enforcement penalty policy)
will be used in developing compliance histories for permit or participation
in innovative program applications, enforcement actions, and decisions on
announced versus unannounced investigations which the agency receives (or
otherwise initiates action on, as further delineated in the proposed subsection)
on or after February 1, 2002. The commission did not intend to imply that
it would not look back to components of compliance history that occurred during
the five years prior to February 1, 2002, as it in fact does intend to utilize
components which occurred during the five years prior, except as specified
for NOVs and for orders issued under TWC, §7.070. As such, the commission
has modified the language to read, "Beginning February 1, 2002, the executive
director shall develop compliance histories with the components specified
in this chapter." Additionally, the sentence has been moved from proposed §60.1(b)
to adopted §60.1(a)(6) in order to put it in chronological order along
with the classification and use effective date of the next phase of rulemaking,
and to move it from the subsection on components to the subsection on applicability
for better organization and clarity.
Concerning proposed §60.1(b), Brown McCarroll stated that the plain
reading of the first sentence of this subsection, adopted as §60.1(a)(6),
"appears to indicate that the components of a compliance history as specified
in the proposed rules would apply to actions (e.g., decisions on permitting?)
by the agency on or after February 1, 2002." Brown McCarroll continued, "This
sentence is confusing and subject to interpretation that is not consistent
with other provisions of these proposed rules. This language appears to be
based on..." HB 2912, §18.05(i). "This provision in the statute is equally
confusing in its context, because other effective date provisions of the statute
in regard to compliance history specified that decisions by the agency on
permits apply only to applications submitted after September 1, 2002, and
various other actions by the agency also have a trigger date of September
1, 2002. Both this statutory provision and the proposed rule provision appear
to conflict with statutory and regulatory provisions concerning the September
1, 2002, effective date. For example, in an agency decision on a permit, is
it to consider the compliance history provisions of the proposed rule or those
of the old rules if the application is submitted in March 2002? Any decision
by the agency on such a permit would be considered an 'action taken by the
agency' and would appear to require consideration of the new compliance history
components as required by proposed §60.1(b). Nevertheless, proposed §60.1(a)(1)
regarding applicability specifies that the agency is to consider the new components
of compliance history under these proposed rules only for applications submitted
on or after September 1, 2002. Therefore, according to proposed §60.1(a)(1),
for an application submitted in March 2002, the agency should consider compliance
history as provided in the current rules in evaluating the application."
Brown McCarroll added, "it does not appear as though the first sentence
of proposed §60.1(b) or corresponding provision in the statute apply
to any other agency 'actions taken' that are not enumerated in {proposed} §60.1(a)(1)
- (4) and HB 2912 §18.05(f), (g), (h), and (j) (i.e., other 'actions
taken' that do not include consideration of permits, inspections, flexible
permitting, and imposition of penalties). In what other types of actions taken
by the agency must the Commission consider the new components of compliance
history after February 1, 2002, but before September 1, 2002? We do not believe
there are any such agency actions envisioned by the statute or the proposed
rules. Brown McCarroll believes that the proper interpretation of both the
statutory provision and the proposed regulatory provision should be that compliance
history elements or events, as enumerated in {proposed} §60.1(b)(1) -
(13), are to be considered components of the new compliance history scheme
on or after February 1, 2002, only. In other words, those elements or events
established before February 1, 2002, are considered part of the current compliance
history scheme. Those elements or events established on or after February
1, 2002, become components of the new compliance history scheme. For example,
any enforcement orders, judgments, or consent decrees issued on or after February
1, 2002, would be one of the enumerated components of compliance history under
{proposed} §60.1(b) to be used in matters for which the agency must consider
compliance history under the proposed scheme on or after September 1, 2002.
In agency decisionmaking where it must consider compliance history prior to
September 1, 2002, however, the commissioners would still consider the compliance
history as it is determined today. This scenario would not, however, leave
a gap in the time period for the current compliance history scheme. During
the period between February 1, 2002, and September 1, 2002, compliance history
elements or events would be considered as compliance history components under
the current scheme and under the proposed scheme. Thus, for example, an enforcement
order issued March 1, 2002, could be considered a component of the current
compliance history scheme in a permitting decision by the Commissioners in
June 2002, and considered a component of the new compliance history scheme
in a permitting decision on or after September 1, 2002. In order to provide
clarity on this issue, we propose the following language to replace the first
sentence of {proposed} §60.1(b): (b) Components. Only compliance history
elements or events that are established (e.g. enforcement order issued) on
or after February 1, 2002, are deemed components of compliance history as
specified in this chapter."
The commission does not agree with these comments. In addition to the response
provided to the previous comment in this preamble regarding the modification
and movement of the language in the first sentence of the subsection, the
commission points out that proposed §60.1(a)(1) does not say that the
agency is to consider the new components of compliance history only for applications
submitted on or after September 1, 2002. Rather, it says that, with regard
to permit applications, "this chapter applies in the consideration of" only
applications submitted on or after September 1, 2002. The language in proposed §60.1(a)(1),
as well as the language contained in proposed §60.1(a)(2) - (4), is taken
from HB 2912, §18.05(g), (h), (j), and (b), respectively. These provisions
of HB 2912 taken in their entirety, along with HB 2912, §18.05(i) and
(a), provide clear directive that the
components
of compliance history provided for in §60.1(b) will be used in
developing compliance histories (under existing rules) for actions (where
compliance histories are currently required)
initiated
on or after February 1, 2002. Further, between February 1, 2002, and
August 31, 2002, for those actions (where compliance histories are currently
required)
initiated
on or after February 1,
2002, the existing rules regarding the
use
of compliance history stay in effect; only the components used in developing
compliance histories during that time will change, if or as applicable, during
that time. Then, beginning September 1, 2002, the
classification and use
of compliance history developed under HB 2912
(in the second phase of compliance history rulemaking) will become effective
for
all
actions requiring compliance histories
AECT commented that it strongly agrees with the first sentence in proposed §60.1(b),
now in adopted §60.1(a)(6), which states, "The components of compliance
history shall apply to an action taken by the agency on or after February
1, 2002," for several reasons. AECT cited as an example that "the Sunset Bill
is clear that NOVs that are administratively determined to be without merit
are not to be a component of a site's compliance history. For all NOVs issued
before these rules become effective (which the Bill requires be not later
than February 1, 2002), there has been and will be no procedure for requesting
or obtaining an administrative determination that such NOVs are without merit.
Therefore, such NOVs would be included in a site's compliance history, even
if they are without merit. Such a result would be unfair and contrary to the
Sunset Bill."
Although the commission appreciates the positive comment in response to
the proposed rules, it fears that the commenter has misunderstood the intent
of this language. First, as discussed in the responses to the previous two
comments in this preamble, the proposed language was not intended to imply
that only the "components" as outlined in proposed §60.1(b)(1) - (13)
which occur on or after February 1, 2002, would be included in a person's
compliance history; rather, it means that the components (including those
occurring within the five years preceding the effective date of this rule)
as defined in proposed §60.1(b)(1) - (13), as opposed to components as
specified in existing rules, will be used in developing compliance histories
for those actions (which require compliance histories) which are
initiated
(as outlined in the rule) on or after February 1, 2002. In
order to help clarify this, the commission has modified and moved the language
in the first sentence of this subparagraph as noted previously. Further, the
commission does not agree that it was the legislative intent that NOVs issued
before these rules become effective all be excluded from a person's compliance
history. The commission appreciates the concern raised by the commenters and
responds that a regulated entity currently has, and will continue to have,
the ability to submit (additional) information for consideration on behalf
of a claim that information included in its compliance history is inaccurate
and/or erroneous. A regulated entity is free, and in fact encouraged, to provide
information for consideration to correct inaccuracies at any time. Further
discussion of this issue can be found in this adoption preamble with the specific
discussions of proposed §60.1(b)(7), which is now §60.1(c)(7). No
changes have been made in response to this comment.
Regarding proposed §60.1(b), ATINGP stated that the first sentence
of this proposed subsection, now in adopted §60.1(a)(6), "seems to conflict
with the effective date provision carefully set forth in {proposed} §60.1(a)(1)
- (4). We understand that this section intends to provide that the new components
of compliance history can be incorporated into the existing regulatory programs
that consider compliance history under §§7.053, 166.122 and 281.21
during the transition period from February 1, 2002 through August 31, 2002.
To clarify the intent of this section, we suggest that the staff reword that
sentence as follows: 'The components of compliance history as specified in
this chapter shall apply to an action taken by the agency pursuant to 30 Texas
Administrative Code §§7.053, 166.122 and 281.21 on or after February
1, 2002, and before September 1, 2002.'" In a similar comment, PHA stated,
"It is unclear when the rule becomes effective. Proposed §60.1(b) notes
that the components of compliance history set forth in the rule apply to action
taken by the agency on or after February 1, 2002. Proposed §60.1(a) however
indicates that the effective date for consideration of compliance history
in those decisions of the agency that are covered by the rule (e.g. decisions
regarding permit issuance, renewal, amendment, modification, denial, suspension
or revocation; enforcement; use of unannounced inspections; and participation
in innovative programs) is September 1, 2002. PHA requests clarification of
the effective date of proposed §60.1."
The commission recognizes that the proposed language has proven to be confusing,
particularly with regard to the use of the term "an action taken by the agency."
The "action" does not refer to the "actions" which constitute the components
of compliance history included in this subsection in paragraphs (1) - (13);
rather, it refers to the "actions" taken by the agency which require the development
and consideration of a compliance history as part of the decision-making process,
as specified in subsection (a) of this section. Further, the commission agrees
with the commenter's interpretation that this section is intended to provide
that the new components of compliance history will be incorporated into the
existing programs that consider compliance history during the time period
between February 1, 2002, and August 31, 2002. In order to help clarify this
issue, the commission has modified the language to read, "Beginning February
1, 2002, the executive director shall develop compliance histories with the
components specified in this chapter," and further, moved it to adopted §60.1(a)(6)
for better organization and clarification. No additional changes have been
made in response to these comments.
Brown McCarroll commented, regarding proposed §60.1(a)(3), which is
adopted §60.1(a)(7)(C), that it "believes that the phrase 'a proceeding
that is initiated or an action that is brought on or after September 1, 2002'
may lead to confusion regarding when a proceeding is initiated or an action
brought without further guidance or clarification on the TNRCC's part. For
example, in an enforcement case, is the proceeding initiated or action brought
when the Executive Director ("ED") sends a respondent a notice of violation
("NOV") letter or when the ED's preliminary report and petition is filed?
Brown McCarroll believes that the proper trigger for this provision is when
the ED's preliminary report and petition is issued and served on a respondent.
Although we do not believe it is necessary to address this issue in the rule
itself, we recommend that guidance in the preamble to the rules adopting these
provisions be provided by the TNRCC in order to clarify this issue."
The commission responds that it has modified the language in adopted §60.1(b),
relating to compliance period, to reflect that the initiation of an enforcement
action is the date of an initial enforcement settlement offer or the filing
date of an EDPR, whichever occurs first. The proposed language indicated that
it was the investigation date which initiated enforcement; the commission
has determined that this change is appropriate as it more accurately reflects
the initiation of an enforcement action. Further, the verbiage includes the
date of "an initial enforcement settlement offer" because an EDPR is not issued
in all enforcement actions. Thus, the language in adopted §60.1(a)(7)(C)
means that for any enforcement action initiated on or after September 1, 2002,
the compliance history classification and use as will be included in this
new chapter on or before September 1, 2002, through the second phase of rulemaking,
will apply. In other words, for an enforcement action initiated on September
2, 2002, through the issuance of an initial settlement offer, the compliance
history use portion of the commission's penalty policy will be superceded
by the requirements of Chapter 60, and the previous five-year compliance history
for the respondent in that enforcement matter will be compiled and used in
accordance with Chapter 60. The commission intends to adopt corresponding
changes to its penalty policy. The other proceedings or actions referenced
in §60.1(a)(7)(C) are with regard to the suspension or revocation of
a permit, which would also be addressed through an enforcement action.
Concerning proposed §60.1(a)(4), which is adopted as §60.1(a)(7)(D),
Brown McCarroll stated that it "believes that the trigger for consideration
of these compliance history provisions on other forms of request for authorization
or a request for participation in innovative programs should be on the date
the request is submitted to the ED, not the date upon which the ED takes action.
We believe this change would provide more certainty for those persons making
such requests. Otherwise, persons filing such requests before the effective
date, September 2, 2002, would not know whether the ED would consider their
request in conjunction with the new compliance history provisions or the old.
Further, it would provide more certainty for the ED's staff in compiling the
compliance history of the requestor, since they would know with clarity whether
the old or new compliance history provisions would apply. Further, the TNRCC
Sunset law is consistent with this recommendation, as the trigger for issuance,
amendment, modification or renewal of permits by the Commission is the date
the application is submitted." Brown McCarroll therefore recommended the following
revision to proposed §60.1(a)(4): "(4) with respect to compliance history,
on requests to the executive director for other forms of authorization or
requests for participation in an innovative program, except for flexible permitting,
only to such requests submitted on or after September 1, 2002."
The commission agrees, and has modified adopted §60.1(a)(7)(D), in
conformance with other modifications made to this language for clarification,
to read, "Beginning September 1, 2002, this chapter shall apply to the use
of compliance history in agency decisions relating to: ... (D) applications
submitted on or after this date for other forms of authorization, or participation
in an innovative program, except for flexible permitting."
Concerning proposed §60.1(a), (at adopted §60.1(a)(8)), WMT commented
that it strongly disagrees with the portion of the applicability of compliance
history language concerning permit actions which states the rule does not
apply to certain permit actions "unless a motion for reconsideration or a
motion to overturn is filed." WMT stated, "The effect of this provision is
that minor permit actions will become major events simply because any third
party believes that a facility is a bad actor. To predicate the consideration
of compliance history in a minor TNRCC permit action on the random event of
the filing of a motion in opposition to the TNRCC's action is inconsistent
with the goal of the legislation. There is adequate opportunity to advance
that theory in other more significant permit proceedings. In addition, there
is a substantial potential that a facility that is actively opposed on general
principle (rather than by virtue of being a bad actor) will suffer a disproportionate
impact under the draft rule. Consequently, WMT requests that the final rule
not allow the introduction of compliance history considerations to matters
that the TNRCC considers minor and for which the TNRCC does not even require
public notice. At a minimum, compliance history should not be considered if
it is the sole basis for the Motion for Reconsideration or Motion to Overturn
Executive Director's Decision." Similarly, Vinson & Elkins stated, "The
proposed rule exempts certain minor permit actions from compliance history
considerations. We believe that this is the correct approach but do not agree
that compliance history considerations should be introduced randomly into
these minor permit actions by the filing of a 'Motion for Reconsideration'
or 'Motion to Overturn.' The occasions for consideration of compliance history
should be predetermined by the rules with certainty by the agency and not
by the opposition to an agency action."
The commission has changed the rule to require the executive director to
file a compliance history with the office of the chief clerk if a motion for
reconsideration or a motion to overturn has been filed and set for a commission
agenda. Any item that is set for a commission agenda should have a compliance
history prepared to allow the commissioners to be fully informed. Additionally,
this language has been separated and moved to adopted §60.1(a)(8) for
clarity.
Jones Day commented regarding proposed §60.1(a) and (b), which is
adopted §60.1(a) and (c). Jones Day commented, "The proposed rule references
in Section §60.1(a) & (b) a plan to take compliance history into
account in the context of applications to participate in 'innovative' programs.
We request that the agency revise this language to include 'innovative programs
and other programs and contributions.' Emphasizing the term 'innovative' may
create the impression that only new or unusual approaches to environmental
protection are relevant. This could exclude from consideration under this
Chapter those TNRCC programs that may contain effective environmental protection
strategies but might not be viewed as 'innovative.' The Agency should be clear
that it does not intend to apply a pre-conceived or fixed notion of what programs
will be covered by this Chapter."
The commission responds that HB 2912 specifically defines what is included
in compliance history and more specifically, what programs are defined as
innovative programs. In TWC, §5.752, Definitions, HB 2912 defines "innovative
program" to mean a program developed by the commission under TWC, Chapter
5, Subchapter Q; TWC, Chapter 26 or 27; or THSC, Chapter 361, 382, or 401;
that provides incentives to a person in return for benefits to the environment
that exceed benefits that would result from compliance with applicable legal
requirements under the commission's jurisdiction; the flexible permit program
administered by the commission under THSC, Chapter 382; or the regulatory
flexibility program administered by the commission under TWC, §5.758.
In this definition of innovative programs, the legislature included a broad
range of programs that do not emphasize that only new or unusual approaches
to environmental protection are relevant. Based on the definition provided
in HB 2912, the commission plans to designate which existing programs are
included in that definition. The commission does not agree with adding the
verbiage "other programs and contributions" since the statute was very specific
which programs of the commission should use compliance history in determining
their eligibility to participate and also broad in their definition of innovative
programs to not limit to only "new or unusual approaches." Therefore, the
commission makes no change in response to this comment.
§60.1(b), Compliance Period
Concerning proposed §60.1(b), TCGA commented that it is concerned
"with the language that allows the TNRCC to review
at least
five years of compliance history." TCGA stated that while
it understands there may be specific circumstances where more than five years
would be reasonable, it believes these instances are limited, and should be
spelled out in the proposed rule, if they are to be included.
The commission responds that it has deleted the "at least" phrase from
the rule as it was proposed with regard to the compliance period to be reviewed,
but has also clarified in the language that a person's compliance history
may be supplemented past (i.e., brought current) the receipt date of an application
in order to account for application processing time. This would be the only
circumstance for which the agency would generate a compliance history for
longer than a five-year period, and under the rule the agency would not go
backwards in time more than the five years prior to the receipt date of an
application.
Plano and WMT commented regarding proposed §60.1(b). Plano raised
concerns with the "at least five year" compliance period, as included in proposed §60.1(b).
Plano stated that it agrees that a five-year period is appropriate for developing
compliance history. Additionally, it agreed that it is appropriate to obtain
supplemental information for the additional time period needed to process
a permit application. However, Plano expressed concerns with leaving the time
frame open-ended, and not specifying what criteria would be used to determine
whether compliance history information in excess of five years is necessary,
as this could lead to discriminatory treatment of a party. Plano stated that,
"As it is currently written, proposed §60.1(b) allows for a great amount
of subjectivity on the part of the TNRCC in terms of determining the time
period for which a compliance history should be developed for a party. Theoretically,
since there is no maximum limit on the time period, a compliance history could
be developed to reach as far back as 20 years or more even though that much
history may not be appropriate." Plano recommended that the compliance history
period be limited to five years, allowing for supplementation for the time
period needed to process a permit application, and stated that it believes
that this provides for an adequate period of time over which to detect any
overall pattern related to compliance. Similarly, WMT commented, "There should
be certainty in the compliance history period considered. WMT recognizes that
most of the 'components' of compliance history are set out in HB 2912, but
the relevant period for consideration of compliance history is not specifically
set out in the law. WMT takes issue with the proposed rule language that '{t}he
compliance history shall cover at least a five year period.' This is a significant
change from the original draft rule that limited the period to a five year
maximum. While the preamble explains this shift as a change to allow the TNRCC
to bring the compliance history current to the point of the action under consideration,
the proposed rule is much broader. Without a standard to determine when the
agency will limit the review to five years or extend it to six, ten, or beyond,
application of the proposed rule is arbitrary by definition. If left as drafted,
an applicant and an opposing party could argue indefinitely about the proper
length of time to consider the facility's compliance history. A set timeframe
with the history brought current to the point of decision should be the rule
and it should be clearly stated."
The commission appreciates the positive comment in support of a five-year
compliance history period. Additionally, the commission responds that it has
deleted the "at least" phrase from the rules as it was proposed with regard
to the compliance period to be reviewed, but has also clarified in the language
that a person's compliance history may be supplemented past (i.e., brought
current) the receipt date of an application in order to account for application
processing time. This would be the only circumstance for which the agency
would generate a compliance history for longer than a five-year period, and
under the rule the agency would not go backwards in time more than five years
prior to the receipt date of an application. This change addresses the concern
that the rule is open-ended or allows for subjectivity.
Regarding proposed §60.1(b), TCONR stated, "We support the language
used in the proposed rule establishing the compliance period as including
'at least' a five-year period. In the preamble to the proposed rule, the TNRCC
gives an example of the need to develop compliance history for a longer period
than 5 years (to supplement compliance history within a time period needed
to process a permit application)." TCONR expressed its concern that in certain
agency programs, a five-year compliance period might not provide adequate
data to assess the person's previous compliance history. TCONR cited as an
example, a situation in which there may not have been an investigation at
the site within the previous five-year period, and stated that "the rule reasonably
allows for a more flexible compliance period, allowing consideration of compliance
data from more than 5 years back." TCONR further requested that the rule include
the following language, "In instances where the site that is under review
has been in operation for less than five years and no inspections have been
conducted since the site began operation, the commission shall conduct at
least one unannounced inspection before taking any action to which this section
applies. Any notices of violation or other enforcement action resulting from
that inspection shall be included in the compliance history." TCONR stated
that the suggested language is consistent with TWC, §5.754(d) which requires
the commission to establish methods of assessing the compliance history of
regulated entities for which it does not have adequate compliance information.
TCONR also stated that this statutory requirement should be carried through
in the next phase of rulemaking concerning classification and use of compliance
history.
The commission appreciates the positive comment in support of the proposed
compliance history period of "at least" five years. However, the commission
responds that it has deleted the "at least" phrase from the rule language,
but has also clarified in the language that a person's compliance history
may be supplemented past (i.e., brought current) the receipt date of an application
in order to account for application processing time. This would be the only
circumstance for which the agency would generate a compliance history for
longer than a five-year period, and under the rule the agency would not go
backwards in time more than five years prior to the receipt date of an application.
This change ensures that the rule is not open-ended and does not allow for
subjectivity. The commission does not agree, however, with the suggestion
to add additional language regarding inadequate compliance history information.
The commission acknowledges that the statute requires the commission to establish
methods of assessing the compliance history of regulated entities for which
it does not have adequate compliance information and will address this issue
during the next phase of rulemaking. The commission concurs that should it
conduct an investigation in response to a permit application submitted by
a person having no previous investigations, it would be appropriate to update
the compliance history with the results of the investigation. No changes have
been made in response to these comments.
Concerning proposed §60.1(b), Cantey & Hanger commented, "Proposed
Rule §60.1(b) says that compliance history shall cover at least five
years. If there were no inspections within the last five years, but had been
inspections prior to that time period, those should not be utilized as a component
in a regulated entity's compliance history. Five years is a substantial enough
time period to penalize a regulated entity which may have had a violation
during an inspection, but the regulated entity should not continue to have
a historical violation negatively impact its compliance history when there
have been no violations during inspections within five years. The TNRCC has
stated in the Proposed Rule commentary that a 'five year period of time is
both adequate and reasonable for consideration of compliance history because
this time period is long enough to detect any overall pattern related to compliance.'
Thus, the language in the Proposed Rule should be changed to 'compliance history
shall cover a five year period.'"
The commission agrees that the proposal did not provide certainty, and
responds that it has modified the language by deleting the "at least" phrase
from the rule language, and has also clarified in the language that a person's
compliance history may be supplemented past the receipt date of an application
in order to account for application processing time, or in other words, brought
current. This would be the only circumstance for which the agency would generate
a compliance history for longer than a five-year period, and under the rule
the agency would not go backwards in time more than five years prior to the
receipt date of an application. This change ensures that the rule is not open-ended
and does not allow for subjectivity, while providing a reasonable period of
time for compliance history consideration.
Regarding proposed §60.1(b), BP suggested that, with regard to the
proposal that compliance history cover at least a five-year period be modified
to delete "at least" and read, "... the compliance history should cover a
five year period except for those plants subject to an annual inspection.
Such plants will be subject to a two year period." BP stated, "Plants subject
to annual inspections with Notice of Violations would be forced to correct
deficiencies, and thus any findings from 5 years prior should be corrected
in most typical circumstances. Therefore, there is no basis to perform a 5-year
look-back."
The commission responds that it has deleted "at least" from the rule. However,
the commission disagrees that plants subject to an annual investigation should
be subject to a two-year compliance period. First, TWC, §5.753, requires
the commission to "develop a uniform standard for evaluating compliance history."
The statute does not provide for exceptions for those sites subject to annual
investigations. Furthermore, under no circumstances does an NOV "force" a
person to correct deficiencies; instead, an NOV notifies a person of alleged
violations, and in most instances provides an opportunity for the person to
correct the violations without additional action being taken (i.e., formal
enforcement action being initiated). A best-case scenario would be one in
which the recipient of an NOV timely addresses the deficiencies noted, and
further, keeps them corrected such that the violations are not present during
the following investigation, annual or otherwise. Additionally, although the
classification and use of compliance history will not be addressed until the
next phase of rulemaking, the commission anticipates that in a situation where
an annual investigation resulting in an NOV is conducted in one year and an
NOV is issued, and investigations are conducted in each of the following four
years without the issuance of an NOV (because the violations noted the first
year have been corrected), the compliance history would reflect positively
on the person. In fact, the commission noted in the proposal preamble that,
with regard to the inclusion of the dates of investigations as a component
of compliance history (proposed §60.1(b)(6)), this information will reflect
how many investigations have taken place during the five-year compliance period,
allowing for a better perspective with regard to the other components of compliance
history, especially those in adopted subsection (c)(1) - (5), and (7). For
example, it will be important to know whether the facility had been inspected
during the compliance period, and how many times, when there are no NOVs or
orders present during the compliance period. Conversely, though, if violations
are noted each year, those violations should be included in the regulated
entity's compliance history. No change has been made in response to this comment.
Birch & Becker commented regarding proposed §60.1(b). The commenter
stated, "It is impossible to evaluate whether a minimum of five years is an
appropriate time period prior to the issuance of the Phase II rules. The Phase
II rules are expected to contain key provisions related to the definition
of repeat violators, the classification of violators, the consequences of
compliance history designations, etc. For example, if under the Phase II rules
it is very easy to become a 'repeat violator' after only two or three NOVs,
then five years may be too long of a compliance period since a large percentage
of the regulated community, especially those with large or complicated facilities,
may become identified as repeat violators." Additionally, Birch & Becker
commented that the "proposed 'at least a five-year period' definition of compliance
history is vague. Again, we assume that this definition will be refined and
illuminated under the Phase II rules, and will likely prompt additional comments."
Although it appreciates the commenter's concerns regarding it being difficult
to evaluate certain aspects of the phase I rulemaking without seeing the phase
II rulemaking, the commission responds that in light of current agency rules
and procedures pertaining to compliance history, it is confident that the
five-year period is an appropriate period of time for evaluating a person's
compliance history, and that it is not necessary to have the phase II rulemaking
in place to make this determination. Furthermore, the commission has modified
the proposed rule language by deleting the "at least" phrase, and has also
clarified in the language that a person's compliance history may be supplemented
past (i.e., brought current) the receipt date of an application in order to
account for application processing time. This would be the only circumstance
for which the agency would generate a compliance history for longer than a
five-year period, and under the rule the agency would not go backwards in
time more than five years prior to the receipt date of an application. This
change ensures that the rule is not vague or open-ended and does not allow
for subjectivity, while providing a reasonable period of time for compliance
history consideration. No other changes to the rule have been made in response
to this comment.
NTMWD, TMRA, and TxSWANA commented regarding proposed §60.1(b). NTMWD,
TMRA, and TxSWANA stated that the use of the phrase "at least" results in
the compliance history being indefinite, and thus, the rule does not establish
by rule a set, identifiable compliance history period as required by HB 2912,
adding that the proposal preamble acknowledges this lack of a definite time
frame. The commenters further stated that the commission should remove the
phrase "at least" from the proposed rule in order to establish a set period
of time, as the statute does not empower the commission to establish a period
for compliance history on a case-by-case basis. NTMWD, TMRA, and TxSWANA went
on to say that the remainder of proposed §60.1(b) limits the compliance
period to no more than five years under certain circumstances, including the
use of compliance history in making decisions regarding enforcement actions,
inspections, or participation in innovative programs. But, the commenters
added, these limits are not sufficient because they do not apply to all cases
in which compliance history would be a factor for consideration, expressly
not applying to permitting cases. NTMWD stated, "This indeterminate length
of compliance history {for permitting cases} makes it very difficult for an
entity to 'clean up' its record before entering into a new permitting process,
and conceivably could negatively affect permitting efforts for an unknown,
extended period of years." NTMWD and TxSWANA also commented that the explanation
provided in the preamble to the proposed rule for the extension of the compliance
history time period past five years appears to be inconsistent with the provisions
of the proposed rule itself, and specifically the provision to consider at
least five years. NTMWD and TxSWANA both commented that the proposal preamble
contemplates looking at the five years preceding the submission of the application
plus the months or years
thereafter
required
to complete the processing of the application. The preamble does not contemplate
looking back more than five years from the date the application is submitted
to the commission, yet the proposed rule provides that the 'compliance period
includes
at least
the five years prior to
the date the permit application is received by the executive director. They
stated that the inclusion of the phrase "at least" allows the commission to
look back further than five years prior to the submission of the application,
and that this does not appear to be the intent of the rule as a whole. As
such, they added, the phrase "at least" should be deleted from the proposed
rule. TMRA added, "The draft rule may also be inconsistent with the Commissioners'
views on how the compliance period should be defined. At the September 26,
2001 Agenda, Commissioner Marquez expressed concern about the inclusion of
the open-ended 'at least five years' compliance history period. He suggested
further that in almost all cases, five years would be sufficient and invited
the public to file comments on the point. TMRA agrees that five years is a
sufficient time period. As suggested in the preamble to the rule, a five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions."
The commission agrees that the proposal did not provide certainty, and
responds that it has modified the language by deleting the "at least" phrase
from the rule language, and has also clarified in the language that a person's
compliance history may be supplemented past the receipt date of an application
in order to account for application processing time, or in other words, brought
current. This would be the only circumstance for which the agency would generate
a compliance history for longer than a five-year period, and under the rule
the agency would not go backwards in time more than five years prior to the
receipt date of an application. This change ensures that the rule is not open-ended
while providing a reasonable period of time for compliance history consideration.
The commission appreciates TMRA's positive comment in support of the rule.
Regarding proposed §60.1(b), 7-Eleven stated it "disagrees with the
proposal to authorize TNRCC to compile information regarding compliance history
covering a period of 'at least five years'. Five years is an adequate period
of time to provide a clear picture of a site's compliance history. The inclusion
of the words 'at least' leads to subjectivity by agency enforcement and permitting
personnel. The rule provides no criteria or standards for whether the 5 year
period will be expanded. Accordingly, there will then be no consistent pattern
for agency personnel to follow in generation of compliance history. TNRCC's
stated purpose for extensions of the five year period is to address the situation
where a permit application or enforcement decision is initiated but is not
resolved until more than five years has passed since events initially considered
in the compliance history at the time of the original application. 7-Eleven
suggested that this issue can be addressed by revising proposed §60.1(b)
to read as follows.
The compliance history shall include multimedia compliance-related information
about a person, specific to the site which is under review, as well as other
sites which are under the commission's jurisdiction and owned or operated
by the same person. The compliance history period includes the five years
prior to the date the permit application is received by the executive director;
the five-year period preceding the date of the inspection that initiates enforcement;
for purposes of determining whether an announced inspection is appropriate,
the five-year period preceding an inspection; for the five years prior to
the date the application for participation in an innovative program is received
by the executive director. The compliance history period may be extended beyond
the date the application for the permit or participation in an innovative
program is received by the executive director or the date of the inspection
that initiated enforcement, until the executive director makes its recommended
decision on the application or enforcement action. The components are:...
Vinson & Elkins provided similar comments regarding proposed §60.1(b),
offering a slightly different version of the final sentence offered by 7-Eleven.
Specifically, Vinson & Elkins recommended: "The compliance history period
may be extended forward from the ending date of the compliance history periods
described above to include compliance history components that occur during
the time that the matter is under consideration by the agency." Vinson &
Elkins added, "A compliance history that is more current is more relevant
to a decision by the TNRCC and may better assist the decision maker with a
more up-to-date picture of compliance history. However, the proposed rule
goes beyond this stated purpose and leaves the compliance history period completely
open. It is unclear what criteria will be employed to determine the length
of a given compliance history and without such defined criteria the decision
on any given matter will be arbitrary. Given the potential consequences of
a negative compliance history, the regulated community should all be evaluated
on a set standard."
The commission agrees with these comments, and responds that it has modified
the language by deleting the "at least" phrase from the rule language, and
has also clarified in the language that a person's compliance history may
be supplemented past the receipt date of an application in order to account
for application processing time, or in other words, brought current. This
would be the only circumstance for which the agency would generate a compliance
history for longer than a five-year period, and under the rule the agency
would not go backwards in time more than five years prior to the receipt date
of an application. This change ensures that the rule is not open-ended while
providing a reasonable period of time for compliance history consideration.
Vinson & Elkins commented regarding proposed §60.1(b), stating,
"The proposed time period for compliance history is inconsistent with statutory
intent in both definition and application. The Legislature directed the Commission
to establish a '
uniform
standard for evaluating
compliance history' (emphasis added). Use of a compliance history of 'at least
five years' is inconsistent with this directive for uniformity because different
compliance time periods could be used for different facilities and for different
business entities." Vinson & Elkins also stated, "The Legislature also
directed the Commission to establish, by rule, 'a period of compliance history,'
not a
range of time
or
minimum period
of compliance history. Furthermore, using a range of
time would allow the Executive Director's staff to subjectively and arbitrarily
choose a time period on a case-by-case basis. The proposed 30 TAC §60.1(b)
could result in application of multiple time periods, rather than 'a time
period for compliance.' It would also allow Executive Director's staff to
use different time periods for different authorizations for the same entity
(i.e. using x number of years in reviewing a permit application, while using
y number of years in a penalty determination). These scenarios are not theoretical;
in fact, the preamble explicitly acknowledges that the agency may apply a
greater than five-year compliance period based on 'case-by-case considerations.'
Such scenarios are inconsistent with the establishment of a single, uniformly
applied compliance period envisioned by the Legislature." Vinson & Elkins
also stated, "The compliance history time period should cover five years prior
to the action in question, i.e. filing of application, agency inspection,
etc. and not extend prior to that five-year period. The objective of these
rules is to provide uniformity in compliance history determinations. It would
be inappropriate for the agency to have the discretion to compile compliance
history information for more than five years prior to the event for some entities
and not others. Therefore, the words 'at least' should be deleted form the
references to the five year period."
Additionally, Vinson & Elkins stated, "The preamble suggests that the
agency may wish to extend the compliance period beyond five years forward
to allow for the time during which a permit application is undergoing review.
This is not unreasonable. The rules should only allow the agency to extend
the compliance period forward in time to allow for these circumstances. Extending
the period back in time is inappropriate because the inconsistent application
of the compliance period is contrary to the statutory directive and has the
potential to effectively prevent an entity from improving its compliance history
record." Finally, with regard to proposed §60.1(b), Vinson & Elkins
proposed the following change.
The components of compliance history as specified in this chapter shall
apply to an action taken by the agency on or after February 1, 2002. The compliance
history shall include multimedia compliance-related information about a person
specific to the site which is under review, as well as other sites under the
commission's jurisdiction and owned or operated by the same person. The period
of compliance history shall be five years prior to the date the permit application
is received by the executive director, the date of the inspection that initiates
enforcement, the date of an announced inspection, or the date of receipt by
the commission of an application for participation in an innovative program,
as applicable. The executive director may extend the compliance period forward
from the end of the applicable five-year period for the purpose of including
compliance history components that occur during the time the matter is under
consideration by the agency.
The commission agrees with these comments, and responds that it has modified
the language by deleting the "at least" phrase from the rule language, and
has also clarified in the language that a person's compliance history may
be supplemented past the receipt date of an application in order to account
for application processing time, or in other words, brought current. This
would be the only circumstance for which the agency would generate a compliance
history for longer than a five-year period, and under the rule the agency
would not go backwards in time more than five years prior to the receipt date
of an application. This change promotes uniformity while providing a reasonable
period of time for compliance history consideration.
TPWA commented regarding proposed §60.1(b), stating that the inclusion
of the words "at least" makes the time period indefinite. TPWA submitted that,
based upon the wording of the statute, requiring the commission to "establish
a period for compliance history" and to do so "by rule," the commission "must
adopt a rule establishing the number of years worth of compliance history
that will be considered" in making decisions, and added that it does not believe
that the proposed rule implements this directive. TPWA stated that the proposal
preamble confirms that no set period has been established when it states that
"the agency may develop a compliance history for a longer period based upon
case-by-case considerations," and added that it does not believe the Legislature
empowered the commission to establish this time-period on a case-by-case basis.
TPWA stated that it "would further point out that the preamble's explanation
for why a compliance history period might extend past five years is inconsistent
with the rule itself," citing by way of example, the verbiage in the proposal
preamble which states that the history might be supplemented for the time
period needed to process a permit application. TPWA stated, "This statement
contemplates looking at the five years preceding the application's submission
plus the months or year thereafter required to complete the processing of
the application. The preamble does not contemplate looking back more than
five years prior to the receipt-date. Yet, the draft rule provides that the
'compliance period includes
at least
the five
years prior to the date the permit application is received by the executive
director.' (Emphasis added.) The inclusion of the words 'at least' could allow
the TNRCC to look back farther than five years prior to the submission of
the application." ICE provided very similar comments, adding, "The inclusion
of the words 'at least' leads to subjectivity by agency personnel. There will
then be no consistent pattern for agency personnel to follow in generation
of compliance history." Finally, TPWA stated that it "realizes that other
parts of section (b) limit the compliance period to no more than five years
under certain circumstances. However, TPWA does not believe that these limits
are sufficient because they do not apply to all cases in which compliance
history would be a factor. Specifically, they do not apply to permitting cases."
The commission agrees with these comments, and responds that it has modified
the language by deleting the "at least" phrase from the rule language, and
has also clarified in the language that a person's compliance history may
be supplemented past the receipt date of an application in order to account
for application processing time, or in other words, brought current. This
would be the only circumstance for which the agency would generate a compliance
history for longer than a five-year period, and under the rule the agency
would not go backwards in time more than five years prior to the receipt date
of an application. This change ensures that the rule is not open-ended while
providing a reasonable period of time for compliance history consideration.
TABCC commented regarding proposed §60.1(b), stating, "The proposed
rules states that the compliance history will cover at least a five-year-period.
TABCC has two concerns with this proposal. First, given the frequency of inspections
by TNRCC and the possible drain on already limited agency resources, we believe
that three years is enough time to give an adequate picture of compliance
history. And, secondly, the words 'at least' leave the door open to all infractions
being considered forever, giving companies who do have a one-time major blemish
on their compliance history, a blemish forever, with no way to ever move beyond
that blemish, however, quickly they correct the error and however many subsequent
'good' inspection evaluations they earn."
The commission disagrees with this comment in part. The commission does
not agree that a three-year compliance period is an adequate period of time
to reflect a person's environmental compliance trends, and as such has made
no change in response to this comment. However, the commission does agree
with the comment regarding the inclusion of "at least" in the language regarding
compliance histories, and has modified the language to delete all references
to "at least," thereby making it a definite time frame during which the agency
can go backwards from the "initiation" of the applicable event to develop
a person's compliance history. The commission appreciates the commenter's
concern for agency resources and intends to compile compliance summaries electronically
in order to maintain efficiency.
Concerning proposed §60.1(b), Brown McCarroll stated that an "issue
arises in relationship to this proposed regulatory provision and certain preamble
language to the proposed rule, where under the Commission's penalty policy,
when assessing compliance history for enforcement purposes, a five-year history
of the alleged violator is examined in all programs." The commenter asserted
that under HB 2912, §18.05(i), "components of the new compliance history
scheme begin to accrue on or after February 1, 2002, so according to the statute,
TNRCC could not consider compliance history elements or events that take place
before this date under the new scheme. Consequently, by statute, the TNRCC
is limited from considering five or more years of compliance history components
under the new scheme before February 1, 2007. Additional language in that
statutory provision specifically supports this position. The statute specifies:
'An action taken by the Texas Natural Resource Conservation Commission before
February 1, 2002, is governed by the law in effect on the date the action
is taken, and the former law is continued in effect for that purpose.' Thus,
until February 1, 2007, in TNRCC decisionmaking, the Agency must consider
two different compliance history schemes, to the extent it considered compliance
history going back five years. Brown McCarroll recommends that TNRCC provide
guidance or at least an explanation on how it will make such dual compliance
history considerations."
The commission disagrees with these comments. The commission disagrees
that HB 2912, §18.05(i) means, that "components of the new compliance
history scheme
begin to accrue
on or after
February 1, 2002" (emphasis added) as the commenter asserts. House Bill 2912, §18.05(i)
states, "The changes made by this Act in the definition of compliance history
TML commented regarding proposed §60.1(b), suggesting "that a shorter
period, perhaps three years, will serve the purpose of HB 2912 and will provide
greater incentive to cities and other members of the regulated community to
improve their particular environmental records." TML further stated that "it
is probable that environmental compliance will become a political issue in
cities that have or develop an unfavorable compliance record. Candidates for
city office are likely to campaign on a platform of improving the environmental
performance of a city that has developed such a record. In the vast majority
of Texas cities, the term of office for their mayors and councilmembers is
two years. Accordingly, a newly elected official who makes a concerted effort
to improve the city's compliance history must serve two and a half terms before
being able to demonstrate to his or her constituents that the efforts have
been effective. A shorter period of time in which an unfavorable incident
can be phased out of a city's record will encourage city officials to make
efforts to improve more quickly, and will provide them with an earlier opportunity
to demonstrate success to their voters. Also, five years is the term of city
wastewater discharge permits, and prior to applying for renewal, a city should
be allowed time to demonstrate within that time period that it has made positive
efforts to remove blemishes from its compliance record. Finally, three years
more nearly reflects the period of time between agency inspections. With a
five-year period of consideration, a city that receives an unfavorable inspection
report will never have the ability to nullify the effect of that report prior
to the next time that the city applies for renewal of its permit."
The commission disagrees that the compliance period should be less than
five years. The commission does not agree that a three-year compliance period
is an adequate period of time to reflect a person's environmental compliance
trends, and as such has made no change in response to this comment. Furthermore,
the commission responds that compliance histories will not be "static" over
a five-year period. Although compliance history classification and use is
outside the scope of this rulemaking and will be addressed in the next phase
of compliance history rulemaking, the commission anticipates that compliance
histories will be updated numerous times over a five-year period, providing
ample opportunity to reflect improvement, or worsening, as applicable. The
commission anticipates that this will provide incentive to local governmental
officials, as well as all regulated entities, to act responsibly and timely
in correcting problems and deficiencies, and in taking "positive" steps to
improve compliance. No changes have been made in response to this comment.
TIP commented regarding proposed §60.1(b), stating that it "provides
that the compliance period must cover 'at least' five (5) years. The TNRCC
should limit the compliance period to two (2) years. Two years is more than
sufficient to provide enough information upon which to make decisions, while
not overwhelming the agency with voluminous data. In additional, the proposed
rules should address a procedure for 'rolling off' old compliance-related
information that falls outside the compliance period. TIP is concerned that
the strict five-year requirements may limit the agency's ability to allow
a shorter compliance period as an incentive for facilities that develop and
maintain environmental managment systems ('EMS'). If the agency decides to
continue to consider five years of compliance data, it should revise section
60.1(b) to not so limit EMS incentives. Finally, if the agency decides to
continue to consider five years of compliance data, it should limit the maximum
compliance period to five years, and delete the proposal to consider
The commission disagrees with this comment in part. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. Additionally, with regard
to components "rolling off" of a person's compliance history, it is based
on the date of the issuance, occurrence, or implementation of the components.
Anything which occurred over five years prior to the preparation of a particular
compliance history will no longer be counted. Furthermore, TWC, §5.753,
requires the commission to "develop a uniform standard for evaluating compliance
history," and responds that any "incentives" for development and maintenance
of an EMS is outside the scope of this rulemaking. The commission has modified
the language by deleting the "at least" phrase from the rule language, and
has also clarified in the language that a person's compliance history may
be supplemented past the receipt date of an application in order to account
for application processing time, or in other words, brought current. This
would be the only circumstance for which the agency would generate a compliance
history for longer than a five-year period, and under the rule the agency
would not go backwards in time more than five years prior to the receipt date
of an application. This change ensures that the rule is not open-ended while
providing a reasonable period of time for compliance history consideration.
ICE commented regarding proposed §60.1(b), stating that "a period
of only three years may be sufficient to provide a good picture of a site's
compliance history. Construction of compliance histories will be a monumental
task for TNRCC staff, given the multiplicity of data sources, internal databases,
types of regulated entities, and programs under which they are regulated.
A shorter time period may lead TNRCC to build more histories on more entities
in a given window--thereby delivering more productively on the Legislature's
request. To make allowance for TNRCC to consider an extension over a three-year
term...." ICE suggested the following revision to the proposed rule language.
The compliance history shall include multimedia compliance-related information
about a person, specific to the site which is under review, as well as other
sites which are under the commission's jurisdiction and owned or operated
by the same person. The compliance history period includes the three years
prior to the date the permit application is received by the executive director;
the three-year period preceding the date of the inspection that initiates
enforcement; for purposes of determining whether an announced inspection is
appropriate, the three-year period preceding an inspection; or the three years
prior to the date the application for participation in an innovative program
is received by the executive director. The compliance history period may be
extended beyond the date the application for the permit or participation in
an innovative program is received by the executive director or the date of
the inspection that initiates enforcement, until the executive director makes
its recommended decision on the application or enforcement action. The components
are...
The commission disagrees with this comment in part. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. However, the commission
has modified the language by deleting the "at least" phrase from the rule
language, and has also clarified in the language that a person's compliance
history may be supplemented past the receipt date of an application in order
to account for application processing time, or in other words, brought current.
This would be the only circumstance for which the agency would generate a
compliance history for longer than a five-year period, and under the rule
the agency would not go backwards in time more than five years prior to the
receipt date of an application. This change ensures that the rule is not open-ended
while providing a reasonable period of time for compliance history consideration.
ACT commented regarding proposed §60.1(b), stating that it supports
the proposed minimum five-year compliance period.
The commission appreciates the positive comment in support of the rule.
TPWA, TxSWANA, TCC, TCFA, and NTMWD commented regarding proposed §60.1(b).
TPWA and TxSWANA stated that five years is too long of a time period, and
that "turning around a facility with a poor compliance record should not take
more than three years." TPWA and TxSWANA both opined that problems identified
in year one should be resolved by year three. Both commenters stated that
an entity that takes an aggressive problem-solving approach to identified
areas of noncompliance should "have that alacrity rewarded by being treated
in accordance with its hard-fought new standard of compliance," and further
stated that the entity should not have to wait and suffer for an additional
two years as a result of issues it pushed to overcome. In addition, TPWA and
TxSWANA stated that "the use of compliance history is only a means of predicting
whether entities are likely to be compliant in the future." Both commenters
stated "that the amount of compliance data recorded over three years is sufficient
to assess an entity's ongoing commitment to compliance. In the course of three
years, there will occur at least three annual inspections at a landfill. (There
will occur many more compliance history events if the multimedia distinction
is left in the rule.) This number of inspections provides a sufficient record
to assess whether an entity is effectively working toward full compliance."
Based on these reasons, TWPW and TxSWANA stated that they believe "that the
three-year compliance period would be sufficient for the purposes of this
rule." Similarly, TCC and TCFA stated that they question the need for a five-year
history, and believe that three years would suffice. TCC and TCFA added, "Given
the frequency of agency inspections, a three year period can provide the agency
with adequate information on which to base compliance history. A three-year
period exceeds the current procedure for compliance summary for" current permits,
which they state is two years, with TCFA specifying permits of waste disposal
activities. TCC and TCFA continued, "In addition, a longer five-year period
can serve as a disincentive to potential business changes that could result
in promoting a cleaner environment." TCC added, "Three years would be a good
middle ground among the various media requirements." Both commenters stated
that, should the agency continue to pursue a five-year history, TCC proposed
that the agency should, at a minimum, remove 'at least'" from the final rule."
NTMWD stated "that five years is arguably too long of a period to consider
when evaluating the compliance history of an owner, operator, or facility.
The Commission has stated that one of the goals of this rule is to identify
poor performers and to assist them with restructuring so as to get them out
of the poor performer catagory. For many entities, compliance problems once
identified will be corrected in a timely manner." NTMWD added, "entities that
take a proactive approach to correct identified compliance issues then continue
to be penalized for what could be isolated compliance issues for a period
of five years." NTMWD stated that in permitting cases, even though those incidents
have been resolved and the entity is currently operating an environmentally
sound facility or business, a five-year period will penalize even compliant
facilities for isolated incidents. NTMWD added that a "five year period will
penalize even compliant facilities for isolated events," and thus suggested
a three-year period.
The commission disagrees in part with these comments. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. However, the commission
has modified the language by deleting the "at least" phrase from the rule
language, and has also clarified in the language that a person's compliance
history may be supplemented past the receipt date of an application in order
to account for application processing time, or in other words, brought current.
This would be the only circumstance for which the agency would generate a
compliance history for longer than a five-year period, and under the rule
the agency would not go backwards in time more than five years prior to the
receipt date of an application. This change ensures that the rule is not open-ended
while providing a reasonable period of time for compliance history consideration.
The commission disagrees that a five-year compliance history will serve as
a disincentive to potential business changes that could result in promoting
a cleaner environment, and responds that compliance histories will not be
"static" over a five-year period. Although compliance history classification
and use is outside the scope of this rulemaking and will be addressed in the
next phase of compliance history rulemaking, the commission anticipates that
compliance histories will be updated numerous times over a five-year period,
providing ample opportunity to reflect improvement, or worsening, as applicable.
The commission anticipates that this will provide incentive to regulated entities
to act responsibly and timely in correcting problems and deficiencies, and
in taking "positive" steps to improve compliance. Such positives will be reflected
in a compliance history. No changes have been made in response to this comment.
Regarding proposed §60.1(b), AECT commented that "AECT strongly disagrees
with making the compliance history period 'at least' 5 years. First, three
(3) years is an adequate period of time to provide a clear picture of a site's
compliance history." AECT additionally commented that the inclusion of the
words "at least" would result in too much uncertainty and subjectivity, and
could lead to inconsistency. AECT commented that they recognize the need to
extend the compliance history period to include the time period from the date
the application for a permit or participation in an innovative program is
filed or the date of the inspection that leads to enforcement, to the date
the ED makes his recommendation on that application or enforcement action.
AECT proposed a revised §60.1(b) to read as follows.
The compliance history shall include multimedia compliance-related information
about a person, specific to the site which is under review, as well as other
sites which are under the commission's jurisdiction and owned or operated
by the same person. The compliance history period includes the three years
prior to the date the permit application is received by the executive director;
the three-year period preceding the date of the inspection that initiates
enforcement; for purposes of determining whether and announced inspection
is appropriate, the three years prior to the date the application for participation
in an innovative program is received by the executive director. The compliance
history period may be extended beyond the date the application for the permit
or participation in an innovative program is received by the executive director
or the date of the inspection that initiates enforcement until the executive
director makes its recommended decision on the application or enforcement
action. The components are...
The commission disagrees in part with this comment. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. However, the commission
has modified the language by deleting the "at least" phrase from the rule
language, and has also clarified in the language that a person's compliance
history may be supplemented past the receipt date of an application in order
to account for application processing time, or in other words, brought current.
This would be the only circumstance for which the agency would generate a
compliance history for longer than a five-year period, and under the rule
the agency would not go backwards in time more than five years prior to the
receipt date of an application. This change ensures that the rule is not open-ended
while providing a reasonable period of time for compliance history consideration.
ExxonMobil Refining recommended, regarding proposed §60.1(b), "that
the commission limit the compliance period to two years or to the last facility
inspection. This will result in a manageable volume of data while providing
sufficient information on which the commission can make its decisions."
The commission disagrees in part with this comment. The adopted five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. The commission
believes that a five-year period of time is both adequate and reasonable for
consideration of compliance history because this time period is long enough
to detect any overall pattern related to compliance. No change has been made
in response to this comment.
§60.1(c), Components
Cantey & Hanger commented regarding proposed §60.1(b), adopted
as §60.1(c), that "violations discovered through participation in innovative
programs should not be counted towards a regulated entity's compliance history."
The commission responds that the definition of innovative programs under
HB 2912 is broad and includes programs that require the use of permits or
other authorizations as part of the innovative program. As such, the commission
may conduct investigations to determine compliance with such authorizations.
Noncompliance with a permit authorization from the commission can result in
an NOV. The commission believes such violations should be included in compliance
history, and the weight to be given to such violations will be addressed in
the use phase of this rulemaking. Other types of innovative programs, such
as those completed by the Small Business and Environmental Assistance Division
of the commission, which is not associated with investigations or enforcement,
and include compliance assistance site assistance visits for small businesses
do not result in NOVs since the purpose of the visit it so assist the entity
to come into compliance. The commission makes no change is response to this
comment.
Cantey & Hanger commented regarding proposed §60.1(b), adopted
as §60.1(c), that "there should be clarification within the Proposed
Rule that upset maintenance notifications will not count towards a regulated
entity's compliance history because they are not violations."
The commission responds that the statute requires that violations be included
in compliance history. An upset or maintenance notification itself is not
a violation unless the notice lacks information required by commission rules.
Emissions which constitute a violation of commission rules, permits, or orders
will be included in a person's compliance history. Emissions which do not
constitute a violation of commission rules, permits, or orders will not be
included in a person's compliance history. No change has been made in response
to this comment.
Concerning proposed §60.1(b), adopted as §60.1(c), AECT and ICE
stated that they agree "that, for multiple reasons, citizen complaints should
not be a component of a site's compliance history" and further agree that
NOVs "issued by EPA should not be a component of a site's compliance history."
The commission appreciates the positive comments in response to the proposed
rule.
Jones Day commented, regarding proposed §60.1(b), adopted as §60.1(c),
that "Out-of-state compliance history
on matters
that would not be violations
under Texas or Federal environmental law
should not be given any weight in Texas compliance history. This conclusion
is consistent with the statute. In some other states, unusual, unique rules
exist within Environmental, Health & Safety regulations; for example 1)
a RCRA program that has additional requirements beyond the Federal program
and unlike Texas rules; 2) a new, innovative California rule with which industry,
across the board, experiences a time lag in reaching full compliance; or 3)
a local zoning rule that would be far outside the jurisdiction of the TNRCC
in Texas. Other rules are embedded in out-of-state environmental regulations
but are outside the jurisdiction of the TNRCC. The logic on page 17 of the
proposed preamble regarding the decision not to include NOVs issued by the
EPA applies equally to this point. In either the rule text or the preamble,
the Commission should clarify that it will not exceed or expand the requirements
of the statute on this point. To the extent the statute requires the agency
to consider out-of-state compliance issues, those matters should be given
reduced weight in determining a company's compliance history, due to the many
uncertainties of such a program. The agency could add text to the preamble
(perhaps at page 12), stating that Commission decisions regarding compliance
history from other states will take into consideration whether the alleged
out of state violation was also a violation of any federal or Texas law. Further,
it should be clear that the Commission will encourage and use no less diligence
and tools to prevent false out-of-state information from appearing in the
compliance history of a Texas facility as it will for in-state information.
Finally, the preamble should mention that the Commission will remove any false
information that inadvertently is added."
The commission responds that TWC, §5.753(b)(3), requires that the
components of compliance history must include, "to the extent readily available
to the commission, enforcement orders, court judgments, and criminal convictions
relating to
violations of environmental laws of other
states
." (Emphasis added.) As such, these components must remain. The
statute does not limit those violations to those that would also be violation
of Texas or Federal environmental laws. Additionally, the commission has added
the word "final" prior to "enforcement orders" in the adopted rule language.
This is to ensure that draft settlement offers or otherwise unapproved items
are not included in compliance histories. This inherently assumes that the
person involved in one of these actions has been afforded the opportunity
to refute the violations and assert due process rights. If, however, a person
asserts that information included as a component of compliance history as
prepared under these rules is erroneous, that person has the ability to provide
documentation to that effect. If the agency agrees with that person's position,
such information will be removed from that person's compliance history. No
changes have been made in response to these comments.
ICE and AECT commented regarding proposed §60.1(b), adopted as §60.1(c),
that they agree "that a site's compliance history should only include components
that are related to the site and other sites that are owned or operated by
the same person." ICE continued, "However, the rule should be revised to make
it clear that an entity's compliance record consists only of compliance matters
regarding that particular entity, and not to that entity's parent or sister
companies. The weighting scheme described by Ms. Ann McGinley of TNRCC on
October 30th, of assigning no more than 25 percent of a compliance history
'ranking' to other sites the responsible person controls, appears acceptable
to ICE. Of course, this particular matter will be addressed in rule-making
under 'Phase II' of the proposed Chapter 60."
The commission appreciates the positive comment in response to the rule.
The commission has determined that the definition of "person" as provided
for in existing 30 TAC §3.2(25) is both adequate and appropriate in relation
to the compliance history rules. If the definition was intended to include
parent, sister, or daughter corporation, or any other related entities, it
would expressly state this. The fact that it does not include such language,
coupled with the reinforcement of this concept in this adoption preamble,
is sufficient. Additionally, as stated by the commenter, the issue of addressing
the "weighting" of any components will be included in the next phase of compliance
history rulemaking, and is outside the scope of the current rulemaking. No
changes have been made in response to these comments.
7-Eleven, TPCA, and ICE commented regarding proposed §60.1(b), adopted
as §60.1(c). The commenters stated, "The first, unnumbered paragraph
of {proposed} Section 60.1(b) limits the use of compliance history to information
relating to the facility which is subject of the permit decision or enforcement
action together with information for facilities owned by the specific person
or entity which owns or operates the subject facility. This limitation correctly
recognizes that it would be extremely difficult, if not impossible to fairly
delineate when information from facilities that are not under the same direct
ownership and management as the subject facility should be attributed to the
subject facility." 7-Eleven, TPCA, and ICE all stated that they strongly support
"this limitation and would oppose any revision of the proposed rule to include
in the definition of compliance history information from facilities that are
not under the same director ownership and management as the subject facility."
The commission appreciates the positive comments in support of the rule.
However, to be clear in its intent, the commission emphasizes that it will
base compliance history on the person applying for a permit or innovative
program or under enforcement. The manager or operator is not specifically
considered unless they, too, are an applicant.
Regarding proposed §60.1(b), adopted as §60.1(c), AECT stated
that it agrees with the proposal preamble language that states that compliance
history will only include components for the "entity filing the permit application,
under enforcement, being inspected, or applying for participation in an innovative
program, as defined by its legal name" and that "any parent, sister, or daughter
corporation related to the legal entity would not be included {in the compliance
history}."
The commission appreciates the positive comment in response to the rule.
Regarding proposed §60.1(b), adopted as §60.1(c), TIP stated
that it "provides that compliance history 'shall include multimedia compliance-related
information about a person, specific to the site which is under review, as
well as other sites which are under the commission's jurisdiction and owned
or operated by the same person.' Sites are commonly owned by one legal entity
and operated by a separate, related or unrelated legal entity. The proposed
rules do not include a procedure for determining to which entity, the owner
or the operator, the site's compliance history will belong. If the TNRCC intends
to attribute a facility's compliance history to the owner, for example, in
a permitting action involving the owner, and then attribute it to the operator,
for example, in an enforcement action involving the operator, TIP is opposed
to such 'double-counting.' The implementing legislation requires the TNRCC
to address a 'person's compliance history.' Including the same site in both
the owner's and operator's compliance histories is inconsistent with legislative
intent." Additionally, in general, BP endorsed the comments submitted by TIP.
The commission responds that, for purposes of developing compliance histories,
components would only include those attributed to the person filing the permit
application, under enforcement, being investigated, or applying for participation
in an innovative program, as defined by its legal name. In other words, only
those compliance history components that had been previously taken by, or
levied against, the applicant, respondent in an enforcement case, or the owner
of the site to be investigated would be included in that person's compliance
history. So if, for instance, an enforcement action was being initiated against
the operator of a site, (i.e., the operator was the respondent in the action),
in looking to that operator's compliance history, only those components attributed
to the operator as the responsible party would be included in its compliance
history. No change has been made to the rule as a result of this comment.
Fort Worth commented regarding proposed §60.1(b), adopted as §60.1(c),
stating, "The wording in this paragraph appears to make a whole jurisdiction
responsible for compliance with all facilities. It is recommended that the
compliance history be specific to each facility, since facilities may be operated
by separate divisions. For example, the wastewater treatment plant should
not have a bad compliance history based on an air pollution violation at an
airport, although both are owned and operated by the same city."
The commission disagrees with the suggestion that compliance histories
be specific to each facility. The statutory language refers repeatedly to
"a person's" compliance history. The commission recognizes that municipalities
can "own" many different types of operations with varying compliance histories
that are located at different sites. Since the statute further requires that
the commission consider the number and complexity of sites, Phase II of the
compliance history rulemaking may address the commenter's concerns in part,
but this issue is outside the scope of this rulemaking. No changes have been
made in response to this comment.
TCC and TCFA suggested that the commission "create a database or other
registry that will allow industry to submit additional information for the
compliance history. This type of information could include supplemental environmental
projects, community awareness projects, participation with local community
panels and other voluntary environmental projects." TCC added, "TNRCC may
not be aware of everything a company is doing that should be considered when
looking at its compliance history. TNRCC could then decide what weight, if
any, to give the information the company submits. If such an informal database
is established, it would be appropriate for TNRCC to put the burden on the
company to resubmit if anything in a prior representation changed (i.e. use
of a community panel, etc.)." Additionally, in general, BP endorsed the comments
submitted by TCC.
The commission disagrees with this comment. The commission does not agree
that the examples of types of additional information suggested by the commenters
are appropriate components. Supplemental environmental projects are actions
performed as a way of offsetting some portion of an administrative penalty.
As such, it is not an appropriate positive component of compliance history.
Although community awareness projects and participation with local community
panels have the potential for beneficial actions or activities, they do not
have any direct bearing on a regulated entity's environmental compliance,
and as such are not appropriate compliance history components. Additionally,
the concept of weighting any of the compliance history components is outside
the scope of this rulemaking, as it will be addressed in the second phase
of compliance history rulemaking. No changes have been made in response to
this comment.
Regarding proposed §60.1(b), adopted as §60.1(c), Jones Day stated,
"The Commission should expand on the 'positive' factors that will be taken
into account when determining compliance history. This will serve as an incentive
to organizations to improve their environmental performance and practices.
The additional factors that TNRCC should consider adding as 'positive' factors
include: Investing or sharing resources to develop new technologies and paradigms
to improve environmental performance, including working with the TNRCC or
even competitors and sharing the privately funded work. Dedicating personnel
and other professional resources to assist the agency with long term policy
problems, legislative initiatives, enforceable commitments, and even active
participation and leadership in local or state brownfield redevelopment programs.
Engaging in 'mentoring' activities with suppliers or other organizations to
improve environmental performance and practices. Providing public environmental
protection or pollution prevention services or programs such as neighborhood
solid or hazardous waste collection services, product recycling or 'take-back'
programs, ride-sharing, and fare subsidies or other programs to decrease pollution
associated with transportation. Designing, manufacturing, or subsidizing the
sale or use of products or services that have a reduced 'environmental footprint'
(e.g., products that use less energy or water, are easily recycled, use fewer
toxic chemicals). Enrolling in TNRCC's VCP program. Participation in community
information or outreach programs that involve the public in the environmental
issues of the organization, including funding and conducting educational programs
that teach neighborhoods, students, and organizations how to improve environmental
performance. Active participation in Local Emergency Planning Commissions
that help protect communities from environmental risks. Initiating and implementing
a substantial environmental, health and safety compliance employee reward
program with real incentives for employees who find ways to improve facility
performance. Purchasing and mandating use of effective professional environmental
software to enhance environmental performance by front-line personnel responsible
for environmental performance. Participating in SEPs. (When a facility voluntarily
participates in a supplemental environmental project while settling an allegation
by the TNRCC, such a choice has traditionally been noted in the back-up material
as a positive factor. Increasing the use of SEPS has been a Commission priority
for the past several years. However weighted, including SEP participation
as a positive component of overall compliance history is a good policy and
a good idea. A SEP focuses resources toward practical and often local environmental
initiatives.) It is important that TNRCC place as much emphasis on a facility's
positive environmental performance as it does on the traditional enforcement-driven
issues. In the proposed draft, the listed 'positive' components for compliance
history are stated too narrowly to encourage innovation or improved compliance
performance."
The commission responds that the wording of §60.1(c) in regard to
positive aspects of compliance history is sufficiently broad to include activities
directly related to a person's compliance and could include many of the examples
sited above. The commission notes that the use of those terms in what is included
in compliance history will be the subject of subsequent rulemaking on compliance
history. The commission stresses that programs that will qualify as positive
aspects of compliance history will have as part of their programs, positive
and verifiable outcomes with regards to the environment and compliance with
environmental law. The commission will create criteria to determine whether
a specific program counts under these positive aspects in subsequent actions
on compliance history use. In response to the notation of supplemental environmental
projects (SEPs) in the positive portion of compliance history, since SEPs
are associated with a negative action by the company in as such as they have
been assessed a penalty for a violation, it is not appropriate to include
this as a "positive" component in compliance history. The commission makes
no change in response to these comments.
EMCC commented regarding §60.1(b), adopted as §60.1(c), stating,
"The rule language should be revised to make it clearer that each legal entity
(person) will have their own compliance history in association with each site
they own or operate, and that the action under review will only consider the
compliance history of those persons directly involved in the proposed action.
In the case of a different owner and operator, only the compliance histories
of person(s) to whom the permit will be issued will be reviewed."
The commission does not agree that the language of the rule in phase I
of the compliance history rulemaking needs to be modified with regard to the
issues raised by the commenter. These issues will be addressed in the next
phase of compliance history rulemaking concerning classification and use.
Therefore, no changes have been made in response to this comment.
Birch & Becker commented regarding proposed §60.1(b), adopted
as §60.1(c), stating that, "The rules do not address if or how compliance
history events that occurred prior to February 1, 2002, will be used under
the new program, although the rules imply that in the first few years of the
program, TNRCC will use pre-February 1, 2002 compliance data as necessary
to build five years of compliance history. Effective September 1, 2002, compliance
history will be considered on various agency decisions and actions. However,
although the components of compliance history will apply to agency actions
starting on February 1, 2002, under the proposed rules, compliance history
shall cover at least a five-year period. Although pre-February 1, 2002, NOVs
and TWC §7.070 orders are specifically excluded from consideration, the
rules do not otherwise explain how pre-February 1, 2002, events will be used
to establish five years of compliance history. Agreed orders and other compliance
data negotiated under a prior regulatory scheme should not now be used for
categorizing the compliance performance of entities under this new regulatory
scheme. For example, in the past, an entity may have been the subject of an
enforcement action concerning disputed allegations, but, in an effort to expeditiously
resolve the dispute, the entity may have executed an agreed order with TNRCC.
However, under the new compliance history scheme, the entity may have instead
chosen to challenge the violation allegations to prevent tarnishing its compliance
history record. Use of any pre-February 1, 2002, compliance data will raise
constitutional retroactive law issues under the Texas Constitution, Art. I, §
16." The commenter further stated, "TNRCC should only use post-February 1,
2002, compliance data for decisions made under the new compliance history
program after September 1, 2002. Since there will be a change in the use of
compliance data and the consequences of certain compliance events, all regulated
entities should be given adequate notice of the components of the new program."
The commission disagrees with this comment. First, the commission responds
that, because the rules state that the compliance period shall cover a five-year
period, and further that none of the components other than NOVs and orders
issued under TWC, §7.070 qualify a "start date" for when those components
will be considered, it is implicit that compliance history events which constitute
components occurring prior to February 1, 2002, will be included in a person's
compliance history. In addition, the proposed rule does not violate the Texas
Constitution prohibition against retroactive laws. The mere fact the proposed
rule requires consideration of events that occurred prior to February 1, 2002,
does not mean that the proposed rule is a constitutionally prohibited retroactive
law. The retroactive law provision of the Texas Constitution operates only
to prohibit the application of statutes which disturb or impair vested rights.
The proposed rule does not impair any vested right of a regulated entity.
The commission does not agree with the commenter's implication that regulated
entities have not been given adequate notice of the components of the "new
program," because all of the proposed "negative" components are currently
utilized in compliance history determinations performed by the agency. Although
the "positive" components are not currently considered in compliance history
determinations, the commission responds that the inclusion of these components
would not in any way raise concerns with constitutional retroactive law issues,
because they are "positives." Thus, the proposed rule does not negatively
alter the reasonable expectations of a regulated entity as to what will be
considered in determining the entity's compliance history. The commission
has made no changes in response to this comment.
TPWA and TxSWANA commented regarding proposed §60.1(b), adopted as §60.1(c).
Both commenters strongly discouraged the use of the word 'multimedia' in §60.1(b)
of the draft rule. TPWA and TxSWANA both added that they predict "that considering
compliance records across all regulated media (i.e. solid waste, wastewater,
and air) would affect cities to a much higher degree than private companies"
because a city is more likely than a private entity to be involved in multiple
media. They both stated that the commission should not adopt any rule that
disproportionately disadvantages Texas cities in relation to private companies.
Additionally, TPWA and TxSWANA stated that they believe that "although it
might be a 'city' that is the permittee in regard to permits in multiple media
(i.e. both a landfill and a wastewater treatment facility), the operational
control of those media is usually very distinct. Both commenters posit that
the "goals of this rule (identifying situations where there is poor compliance
and working with those in control to rectify the situation) are not advanced
by penalizing a city supervisor in one media for the acts of a city supervisor
in another media when he had no control over those acts." TPWA and TxSWANA
both commented that "the consideration of multimedia data could lead to unintended
consequences that are antithetical to the intent of this rule and its underlying
legislation. To understand the possible consequences, consider the situation
where a city has a terrible compliance record at its wastewater treatment
plant and an exemplary record at its landfill. The landfill supervisor cannot
influence or affect the operation of the wastewater treatment plant so the
fact that the city's wastewater treatment plant supervisor has incurred several
notices of violation (NOVs) should not impact whether the city's landfill
supervisor is entitled to participate in an innovative landfill program. The
other possible unintended result is that an 'average' ranking might result
if the wastewater treatment plant's compliance record is averaged with the
landfill's compliance record. Under these facts, the out-of-compliance wastewater
treatment plant would be allowed to continue to operate out of compliance
without suffering the consequences of a poor compliance record."
NTMWD presented similar comments regarding proposed §60.1(b), adopted
as §60.1(c). NTMWD stated that it respectfully requests that the commission
remove the word "multimedia" from the proposed rule language, adding that
the "consideration of a multimedia compliance history has direct effects on
NTMWD and other large municipal governmental entities" because it will penalize
large municipal governmental entities that operate multiple regulated facilities.
"The compliance history at one facility will affect the permitting effort
or enforcement penalty calculations at another facility. Entities that own
multiple facilities face a greater possibility of having violations throughout
those facilities. That is simply the nature of owning and operating more than
one facility because there will be more opportunities for violations. Over
time, even 'good actors' will be more likely to have violations if they operate
multiple facilities. Compliance history should not be defined in such a way
as to penalize entities that own and/or operate multiple facilities." NTMWD
stated that it owns and/or operates multiple wastewater treatment plants,
two landfills, three transfer stations, and a water treatment facility in
its service area. Further, NTMWD stated that it has taken over ownership and
operation of several wastewater treatment plants due to its efforts to further
the regionalization of wastewater treatment services in the area north of
Dallas. NTMWD stated that "{m}any of these plants have not been well-operated
prior to the District taking over daily operations, and thus, there is the
very real possibility of enforcement actions being taken against the District
while the District works, over a period of time, to bring these plants into
compliance with Commission regulations. If multimedia compliance histories
are considered by the Commission, NTMWD's proactive approach to improving
the operation of these facilities and furthering the Commission's regionalization
goals will negatively affect the District in other permitting activities,
such as the permitting of a new regional landfill facility. Because of situations
like this, the word 'multimedia' should be struck from" the proposed rule."
Regarding proposed §60.1(b), adopted as §60.1(c), BRA stated
that it "allows for unrelated facilities with unrelated compliance problems
to be tied together for the purposes of compliance history." BRA stated that
it "is concerned that the proposed rule may be overly broad in its consideration
of all media for compliance history purposes and that it may actually go further
than the law directed in this area."
The commission disagrees with these comments. First, many companies operating
in Texas have multimedia concerns. The commission has determined that it is
appropriate to perform a multimedia compliance history review based on the
fact that the applicable statutory language repeatedly refers to the compliance
history of a "person." It does not say "for a person, by media." This implies
an "encompassing" compliance history. Further, the statute requires that components
of compliance history include enforcement orders, court judgments, and criminal
convictions for environmental violations within the state of Texas, as well
as enforcement orders, court judgments, and criminal convictions for environmental
violations in other states. Again, it does not say "orders, etc. concerning
the media which is the subject of the permit application, enforcement action,
investigation, etc." What the commenter suggested would limit the compliance
history determination, while the statute references "person" (as opposed to
media), and states that all regulated sites, inside and outside the state
of Texas, must be taken into account. It is possible and even likely that
for a person owning multiple regulated sites, one or more sites may be regulated
under one program or medium, while other sites are regulated under media.
Thus, to include only one of a person's media is in conflict with the purpose
of developing a "comprehensive compliance history." The commission is, however,
limiting the compliance histories to only those components attributable to
the entity filing the permit application, under enforcement, being investigated,
or applying for participation in an innovative program, as defined by its
legal name; it will not include related entities such as parent, sister, or
daughter corporations. The statute also requires that the commission consider
the number and complexity of sites, which may address the commenter's concerns
in part, but this issue is outside the scope of this rulemaking, and will
be addressed in the next phase relating to compliance history classification
and use. With regard to changes in ownership, it is the intention of the commission
to implement the requirement of HB 2912 to develop a uniform standard for
evaluating compliance history. The commission believes five years is both
adequate and reasonable for considerations of compliance history because this
time period is long enough to detect any overall pattern of related to compliance.
The commission has determined that by looking at the entire five-year period
for a site, even when a sale of a facility has occurred, an accurate compliance
history picture will emerge. However, the commission believes it is necessary
to allow some degree of flexibility for companies that purchase facilities,
which is why the rule allows that for any part of the compliance period that
involves a different owner, the compliance history will be assessed for only
the site under review. No changes have been made in response to these comments.
Regarding proposed §60.1(b), adopted as §60.1(c), Jones Day stated,
"Clarify in the preamble how it is possible to build a positive compliance
history when no prior compliance history currently appears in TNRCC records.
In cases where no negative compliance history exists for a facility or company,
that person should be able to build a positive compliance history through
voluntary initiatives. At the TNRCC stakeholder meeting on August 6, 2001,
TNRCC personnel stated that if no compliance history existed in agency databases,
then an inspection program might be required to give a facility its initial
compliance history. Addressing this issue in some detail in the preamble of
the definition section would prove helpful. The ability to build a positive
compliance history before a TNRCC inspection would motivate facilities toward
more voluntary improvements and activities. Practically speaking, inspecting
every facility in the state so as to create a compliance history may prove
unrealistic or burdensome to the point of detracting from other important
agency programs."
The commission responds that this comment is outside the scope of this
rulemaking. TWC, §5.754(d), requires that the "commission by rule shall
establish methods of assessing the compliance history of regulated entities
for which it does not have adequate compliance information. The methods
§60.1(c)(1)
Brown McCarroll, Vinson & Elkins, and Jones Day commented regarding
proposed §60.1(b)(1), which is adopted as §60.1(c)(1). Brown McCarroll
stated that it "believes that there are types of enforcement orders and consent
decrees that, although they may relate to environmental laws, do not evidence
culpability relating to compliance with environmental laws. For example, some
consent decrees involve state and federal Superfund matters that have little
if any bearing on compliance with environmental laws. Just because a person
may be liable for remediation under some of these laws and enters into a consent
decree to settle such liability, it does not mean that the person violated
any environmental laws. In fact, in most situations, the potentially responsible
party ('PRP') has violated no environmental laws but is agreeing to clean
up the site or contribute to the cleanup to resolve potential liability associated
with the site. In some situations, PRPs may seek an enforcement order to require
the remediation activities they undertake in order to assure that they have
the predicate by statute to file a contribution claim against other third
party PRPs. ... Further, for those persons facing 'arranger' or 'generator'
liability under state or federal Superfund, the nexus to compliance with environmental
laws is even more attenuated, since such persons did not even own or operate
the facility in question." Brown McCarroll further stated that it "does not
believe these types of orders or consent decrees should be considered negative
components of a compliance history. At a minimum, we believe TNRCC should
provide guidance that indicates such types of orders or consent decrees would
be given much less weight in agency decisionmaking, since they typically do
not involve compliance with environmental laws. Alternatively, and more preferable
in our opinion, that provision of the proposed rules should be amended to
read as follows: (1) Any enforcement orders, court judgments, consent decrees,
and criminal convictions of this state and the federal government relating
to compliance with an environmental law, regulation, permit, order, consent
decree, or other requirement under the jurisdiction of the commission or the
EPA, not including those orders, judgments, or decrees involving state or
federal Superfund remediation liabilities." Similarly, Vinson & Elkins
stated that it agrees "with the Commission that the components of compliance
history should not include citizen complaints, incidents where a facility
must implement its contingency plan, and EPA NOVs. The Commission also should
exclude from the components orders and consent decrees which a person enters
into with EPA, TNRCC, or other states which involve remediation of a contaminated
site under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA), the Texas Superfund statute and other state equivalent statutes.
These orders or consent decrees do not involve the violation of an environmental
law or regulations, but often are the only mechanism available to enable a
person to later recover costs for other persons responsible for the contamination.
Making these documents components of compliance history will discourage entities
from entering into voluntary consent decrees and undertaking clean up. This
would unnecessarily prolong the process of securing necessary remediation
activities for contaminated sites. We propose adding the following language
to §60.1(b)(1) and §60.1(b)(3): ', except for orders or consent
decrees entered into voluntarily to address the clean up of contamination
at a site under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), the Texas Superfund statute or equivalent statutes
from other states.'" Similarly, Jones Day commented, "We suggest a sentence
in the preamble that applies a different treatment of U.S. Superfund consent
decrees from any other component in Texas compliance history. It is widely
acknowledged that, in the unique world of federal Superfund, EPA consent decrees,
especially those memorializing de minimus settlements, differ dramatically
from the matters intended by the Texas Legislature to become part of TNRCC
compliance history."
The commission appreciates the positive comment in support of the rule
as it excludes complaints, incidents where a facility must implement its contingency
plans, and EPA NOVs from the components of compliance history. The commission
agrees that consent decrees and enforcement orders which are entered solely
for the purpose of addressing remediation and do not involve noncompliance
with environmental laws should be excluded from compliance history considerations.
However, the commission has determined that the language in the rule already
addresses this sufficiently. Specifically, with regard to adopted §60.1(c)(1),
although this states in part, "relating to
compliance
with applicable legal requirements under the jurisdiction of the commission
or the EPA," (emphasis added), because this is considered one of the "negative"
components, it is only intended to address violations of applicable legal
requirements. This will be further addressed in the next phase of compliance
history rulemaking concerning classification and use. Additionally, adopted §60.1(c)(3)
specifically refers to violations, and as such is self-evident. No changes
have been made in response to this comment.
TCFA, BP, BRA, and ATINGP commented regarding proposed §60.1(b)(1),
which is adopted as §60.1(c)(1). BP and TCFA stated that they believe
"it is imperative that consent decrees, especially those consent decrees entered
into voluntarily in partnership with EPA should not be viewed as a negative
in the compliance history. At a minimum, TNRCC should set the trigger date
on or after February 1, 2002 if all consent decrees are viewed equally." BP
added, "Our preference is for TNRCC to give positive weighting to voluntary
decrees such as our recent BP/EPA/DOJ decree." BP continued, stating that
it "opposes any effort to penalize companies that negotiated consent decrees
in good faith in an effort to meet EPA's emerging views of existing NSR rules.
To view such an activity as a negative contributor to compliance would send
the wrong signal to our industry's and the federal government's commitment
for improved environmental performance in the refining sector. Therefore,
TNRCC should give positive weighting to these decrees." BRA stated that the
proposed language "allows consent decrees to be considered as part of the
compliance history." Although BRA stated that it realizes that HB 2912 requires
consent decrees to be included, it believes that is "bad public policy." BRA
added, "Including them could force regulated entities to increasingly focus
on negotiations with regulators, which will surely result in longer timelines
to fix environmental problems. It could also have the effect of causing permittees
to avoid consent decrees altogether." ATINGP stated that consent decrees,
"with no admission of a violations should not be part of the compliance history.
Otherwise, the TNRCC will be frustrating the legal process, discouraging rather
{than} encouraging the informal resolution of disputes, and presuming a violation
even though the decree or order negates that premise. In the alternative,
a no admission consent decree should be assigned no weight in the TNRCC's
formula for determining the ranking system for poor, average, or high performers.
The same criteria should be utilized for agreed orders and consent orders."
The commission disagrees with these comments. Consent decrees imply violations
even if they do not directly state this on their face. Consent decrees are
by their nature entered into voluntarily, as are the majority of enforcement
orders issued by the commission. In fact, the enforcement orders issued under
TWC, §7.070, contain language stating that neither party admits nor denies
the allegations contained in the document. Court judgments may likewise be
entered into voluntarily. The legislature has seen fit to require that "enforcement
orders, court judgments, consent decrees, and criminal convictions" be included
as components of compliance history. The commission has determined that, because
of the nature of consent decrees, they should be treated similarly to enforcement
orders, etc. Furthermore, the intent of the legislature was that the commission
should not "wipe the slate clean" on any of the components of compliance history,
and as such, no changes have been made in response to these comments.
Vinson & Elkins commented regarding proposed §60.1(b)(1), which
is adopted as §60.1(c)(1), stating that the "proposed rule seems to expand
the components mandated in H.B. 2912. The proposed rule substitutes the language
'relating to compliance with an environmental law, regulation, permit, order,
consent decree, or other requirement under the jurisdiction of commission
or the EPA' for the statutory language of 'relating to compliance with applicable
legal requirements under the jurisdiction of the commission or the United
States Environmental Protection Agency.' There is no explanation for the change
in terminology of the proposed rule." Vinson & Elkins recommended that
the language of the paragraph be amended to read, "any enforcement orders,
court judgments, consent decrees, and criminal convictions of this state and
the federal government issued or entered for violation of a legal requirement
under the jurisdiction of the commission or the EPA."
The commission disagrees that the rule, as proposed, expands the components
mandated in HB 2912. The language in proposed §60.1(b)(1) is taken from
two sources in the TWC. First, TWC, §5.753(b)(1) states that the "components
of compliance history must include enforcement orders, court judgments, consent
decrees, and criminal convictions of this state and the federal government
relating to compliance with
applicable legal requirements
under the jurisdiction of the commission or the United States Environmental
Protection Agency." (Emphasis added.) Additionally, TWC, §5.752(1), defines
the term "applicable legal requirement" as "an environmental law, regulation,
permit, order, consent decree, or other requirement." The commission simply
replaced the term with its definition, as provided for in the statute. Therefore,
the commission has not expanded the components mandated. However, in order
to avoid any confusion, the definition of "applicable legal requirement,"
instead of being contained within the first sentence of the text, has been
separated out for clarity; the commission has modified the language in adopted §60.1(c)(1)
to read: "any final enforcement orders, court judgments, consent decrees,
and criminal convictions of this state and the federal government relating
to compliance with applicable legal requirements under the jurisdiction of
the commission or the EPA. 'Applicable legal requirement' means an environmental
law, regulation, permit, order, consent decree, or other requirement." The
word "final" has been added to reflect that this component will not include
draft or proposed enforcement orders, court judgments, or consent decrees.
TML commented regarding proposed §60.1(b)(1), (adopted as §60.1(c)(1)),
stating that in the proposal preamble, the commission suggests that EPA NOVs
"not be included in Chapter 60 because TNRCC does not have the opportunity
to evaluate the merit of such notices of violation. However, {proposed} §60.1(b)(1)
states that components of compliance history includes 'any enforcement orders,
court judgments, consent decrees, and criminal convictions of this state and
the federal government relating to compliance with an environmental law, regulation,
permit, order, consent decree, or other requirement under the jurisdiction
of the commission or the EPA.' TML believes that the language 'relating to
compliance' and 'or other requirement' may be interpreted to include EPA NOVs.
TML suggests substituting 'establishing noncompliance' in lieu of 'relating
to compliance' and deleting 'or other requirement.' Alternatively or in addition,
the phrase 'provided that the commission has the opportunity to evaluate the
merit thereof' at the end of subsection (b)(1)."
The commission disagrees with this comment. The language in adopted §60.1(c)(1)
is taken from two sources in the TWC. First, TWC, §5.753(b)(1), states
that the "components of compliance history must include enforcement orders,
court judgments, consent decrees, and criminal convictions of this state and
the federal government relating to compliance with
applicable legal requirements
under the jurisdiction of the commission
or the United States Environmental Protection Agency." (Emphasis added.) Additionally,
TWC, §5.752(1), defines the term "applicable legal requirement" as "an
environmental law, regulation, permit, order, consent decree, or other requirement."
The commission simply replaced the term with its definition, as provided for
in the statute. The commission disagrees that "relating to compliance" and
"or other requirement" can be interpreted to include EPA NOVs, especially
when not read in context, and taken in consideration with other parts of the
rule. First, the list of items required by statute to be included, (i.e.,
enforcement orders, court judgments, consent decrees, and criminal convictions)
makes no mention of notices of violation. Second, notices of violation are
addressed separately in adopted §60.1(c)(7). The commission further disagrees
that it is necessary the change "relating to compliance" to "establishing
noncompliance" or to delete "or other requirement" because the proposed language
mirrors the statute, and because the word "final" has been has added in front
of "enforcement orders" in both adopted §60.1(c)(1) and (3) to reflect
that this component will not include draft or proposed enforcement orders
or court judgments. The commission disagrees with the suggestion to add "provided
that the commission has the opportunity to evaluate the merit thereof" at
the end of this paragraph. The statutory language does not require the determination
of merit for this particular component. Additionally, respondents in enforcement
proceedings are afforded due process rights which they are entitled to take
advantage of. If such an action is considered "final," the merit of the action
has been determined, as least in the eyes of the commission. No others changes
has been made in response to this comment.
ATINGP commented regarding proposed §60.1(b)(1), which is adopted
as §60.1(c)(1). ATINGP recommended that "this subsection be amended to
insert the language 'except for those determined administratively or judicially
to be without merit' following the clause 'any enforcement orders.' The TNRCC
has recommended that NOVs that are 'administratively determined to be without
merit' are not to be included in compliance history. To maintain consistency
with that provision," ATINGP recommended that "the same standard be applicable
to enforcement orders. A due process appeals process should also be established
for determining the merit of these orders, as is more fully described in our
comments" regarding proposed §60.1(b)(7).
The commission disagrees with this comment. First, the language concerning
NOVs determined to be without merit being excluded from compliance histories
is taken directly from TWC, §5.753(d), which stated in part, "A notice
of violation administratively determined to be without merit shall not be
included in a compliance history." Thus, it is more than a "recommendation,"
it is required by statute. Further, it is not necessary to "create" a due
process appeals process for enforcement orders, as one already exists at 30
TAC Chapter 80. And finally, the commission notes that it has added the word
"final" in front of "enforcement orders" in adopted §60.1(c)(1) and (3)
to reflect that this component will not include draft or proposed enforcement
orders or court judgments.
7-Eleven, TPCA, and ICE commented regarding proposed §60.1(b)(1) and
(3), which is adopted as §60.1(c)(1) and (3). 7-Eleven, TPCA, and ICE
commented that these two paragraphs "include the term 'enforcement orders'
in the definition of compliance history. The term 'enforcement orders' is
grouped together with judicial and criminal convictions. As currently proposed,
this language would include in compliance history various categories of agency
orders which make findings that are preliminary and subject to challenge by
the subject facility or person. As recognized by the treatment of Notices
of Violation in the proposed rule, Section 60.1(b)(7), it is inappropriate
to categorically include in compliance history all agency findings until such
time as the agency order is final, either by agreement of the parties, by
failure to contest the order by the subject person, or after findings are
made in a contested case hearing. It is recommended that the word 'final'
be inserted before the words 'enforcement orders' in Sections 60.1(b)(1) and
(3). Alternatively, subparagraphs (1) and (3) should be revised to include
language similar to Subparagraph (7) which excludes from compliance history
those enforcement orders which have been successfully challenged by the subject
person."
The commission agrees with this comment, and has added the word "final"
in front of "enforcement orders" in adopted §60.1(c)(1) and (3) to reflect
that this component will not include draft or proposed enforcement orders
or court judgments.
7-Eleven and TPCA commented regarding proposed §60.1(b)(1) and (3),
which is adopted as §60.1(c)(1) and (3). 7-Eleven and TPCA commented
that these two paragraphs "include 'enforcement orders' in compliance history
but exclude certain 'notices of violation.' No practical definition is provided
to distinguish 'enforcement orders' from 'notices of violation.' Without further
definition, state actions that are merely NOVs, and do not rise to the level
of formal enforcement orders will be included in compliance history. As recognized
by the TNRCC staff during stakeholder meetings, it is not possible to review
and evaluate the underlying merits of other-state actions. Administrative
efficiency and fairness dictate that where precise information is not available,
TNRCC should use an objective, 'bright line' standard to define what is included
in compliance history. To ensure that the compliance history only reflects
the other-state actions which are a reliable reflection of the compliance
history of the persons, i.e. actions taken after significant agency review,"
7-Eleven and TPCA recommended "that the term 'enforcement orders' be defined
to only include actions which: (i) include a significant penalty assessment;
(ii) make an explicit factual finding that a violation of environmental laws
has occurred and ... have been resolved with finality."
The commission responds that the statute requires at TWC, §5.753(d),
that the set of compliance history components shall include NOVs. Within the
adopted language of §60.1(c)(7), the word "an" was changed to "state"
as it precedes "environmental law, regulation, permit, order, consent decree,
or other requirement" to limit the use of NOVs to those regarding violation
of Texas requirements. Additionally, the commission has added the word "final"
in front of "enforcement orders" in both adopted §60.1(c)(1) and (3)
to reflect that this component will not include draft or proposed enforcement
orders or court judgments. The commission disagrees with the suggestion that
out-of-state enforcement orders only be counted towards compliance history
if they "include a significant penalty assessment." The inclusion (or not)
of an administrative penalty has no bearing on the validity of the violations
included, and further, the commenters do not suggest what constitutes "significant."
Certainly, what is significant to one respondent may not be significant to
another. Therefore, no change has been made in response to this comment. Additionally,
the commission has no control over whether enforcement orders issued in other
states contain an "explicit factual finding that a violation of environmental
laws has occurred." It is certainly within the realm of possibility that other
states have provisions similar to those in TWC, §7.070, allowing that
state to issue orders without findings of fact and conclusions of law. No
change has been made in response to this comment.
TCFA commented regarding proposed §60.1(b)(1) and (3), adopted as §60.1(c)(1)
and (3). TCFA proposed to "exclude enforcement orders, consent decrees, and
violations of laws in other states that occurred before February 1, 2002,"
from these compliance history components.
The commission disagrees with this recommendation, as the legislative intent
was for the commission not to "wipe the slate clean" and only count as components
of compliance history those things which occur on or after the effective date
of these rules. Rather, the commission is to implement this rule and
TCC commented regarding proposed §60.1(b)(1) and (3), adopted as §60.1(c)(1)
and (3). TCC stated, "The use of compliance history is undergoing a significant
change with this and subsequent rulemaking. Thus, prior agreements with the
agency should be excluded from the compliance history. Enforcement orders
and consent decrees issued prior to this proposed rulemaking did not have
the potential to be used for compliance history with such a significant impact
as will be determined in the phase 2 of this rulemaking. Even if they were
used, the significance was not known at the time the results were negotiated.
And, violations of laws of other stated have not been previously included
in Texas compliance history. Therefore, TCC proposes to exclude enforcement
orders, consent decrees, and violations of laws in other states that occurred
before February 1, 2002 from the compliance history in Sections 60.1(b)(1)
and (b)(3). That way, companies are on notice that such matters will be a
part of compliance history in Texas and may lead to categorizing the company
for regulatory purposes. It is patently unfair to go back and increase the
significance of events after they have occurred." Additionally, in general,
BP endorsed the comments submitted by TCC.
The commission disagrees with this comment. The legislative intent was
for the commission not to "wipe the slate clean" and only count as components
of compliance history those things which occur on or after the effective date
of these rules. Rather, the commission is to implement this rule and
§60.1(c)(2)
Representatives Puente, Burnam, Maxey, and McClendon commented regarding
proposed §60.1(b)(2), (adopted as §60.1(c)(2)). All four representatives
stated that the proposed rule would limit consideration of administrative
penalty orders issued under TWC, §7.070 to those issued after February
1, 2002. Representative Puente stated that TWC, §7.070, provides that
orders issued under this section of the TWC are not part of the entities'
compliance history; however, HB 2912 expressly requires such orders to be
included in compliance history, "notwithstanding" other provisions of the
TWC. Representative McClendon added that "{o}rders issued under Section 7.070
are referred to as 'findings' orders. Section 7.070 provides that such orders
are not part of an entities' compliance history. However, HB 2912 expressly
requires such orders to be included in compliance history, 'notwithstanding'
other provisions of the Water Code."
The commission agrees that TWC, §5.753(b)(2), states that "notwithstanding
any other provision of this code, orders issued under Section 7.070" must
be included in the components of compliance history. However, the statute
does not state "notwithstanding any provisions contained within orders issued
under §7.070." Because of this, the commission has determined that the
orders issued under TWC, §7.070 prior to February 1, 2002, cannot be
included in a person's compliance history because the language included in
these orders precludes this. Specifically, TWC, §7.070(1) - (3) states,
"An agreed administrative order
may
include
a reservation that: (1) the order is not an admission of a violation of a
statute within the commission's jurisdiction or of a rule adopted or an order
or a permit issued under such a statute; (2) the occurrence of a violation
is in dispute;
or
(3) the order is not intended
to become a part of a party's or a facility's compliance history." (Emphasis
added.) In September of 1995, when the commission began to use orders crafted
under the provisions of TWC, §7.070, (generally referred to as "1660
orders"), language was included stating that the occurrence of any violation
is in dispute and the entry of the agreed order shall not constitute an admission
by the respondent of any violation alleged in the order, nor of any statute
or rule, and further that the order is not intended to become a part of the
respondent's compliance history. The commission does not currently consider
1660 orders as a component of compliance history because of the language included
and the associated understanding between the parties that they will not be
considered for purposes of compliance history. Respondents in enforcement
matters may have, at least in part, made their decision to settle rather than
pursue an administrative hearing based on this language. In response to the
provision in TWC, §5.753(b)(2), the commission has modified the language
in 1660 orders being offered to respondents for settlement of applicable enforcement
matters to state that if the order becomes effective prior to February 1,
2002, the order is not intended to become a part of the respondent's compliance
history. The language, as noted previously in this preamble, has been modified
to state that the order will become a part of the respondent's compliance
history if it is approved by the commission on or after February 1, 2002.
No change has been made in response to this comment.
The commission would note that it also utilizes other orders not crafted
under TWC, §7.070, generally referred to as "findings orders." These
orders contain findings of fact and conclusions of law, and do not contain
the provision stating that they will not become a part of the respondent's
compliance history. Findings orders are used in some enforcement matters,
based on specific criteria, and these are currently considered as a component
of compliance history, and would continue to be included, even those issued
prior to February 1, 2002, under the proposed rule. Further, the commission
would point out that the verbiage in TWC, §7.070, does not state that
NOVs which are the basis for orders issued under TWC, §7.070, shall not
be considered in a person's compliance history, and neither does the language
included in those orders; the commission currently considers, and will continue
to consider those NOVs as components of compliance history, and as such, the
violations contained in those orders will not be "lost" in compliance history
considerations.
TCONR and ACT both commented regarding proposed §60.1(b)(2), (adopted
as §60.1(c)(2)). TCONR stated that the "agency created exclusion--for
administrative penalty orders issued under Water Code § 7.070 prior to
February 1, 2002, ... violates the language and intent of the statute and
should be withdrawn." TCONR asserted that HB 2912 did not exclude these orders,
and stated that it believes the statutory requirement that the commission
establish a uniform and effective compliance history program reflects an intent
to include these orders notwithstanding the provisions of TWC, §7.070.
ACT stated that the proposed rules would "include only those §7.070 orders
issued after February 1, 2002. ACT believes the statute is unambiguous: these
orders are to be included in compliance history not withstanding any other
statutory provision... While it may lead to an unexpected result for those
who thought 7.070 orders would not be a part of their compliance history,
that is not sufficient basis for ignoring a clear statutory directive."
The commission agrees that TWC, §5.753(b)(2), states that "notwithstanding
any other provision of this code, orders issued under Section 7.070" must
be included in the components of compliance history. However, the statute
does not state "notwithstanding any provisions contained within orders issued
under §7.070." Because of this, the commission has determined that the
orders issued under TWC, §7.070, prior to February 1, 2002, should not
be included in a person's compliance history because the language included
in these orders precludes this. Specifically, TWC, §7.070(1) - (3) states,
"An agreed administrative order
may
include
a reservation that: (1) the order is not an admission of a violation of a
statute within the commission's jurisdiction or of a rule adopted or an order
or a permit issued under such a statute; (2) the occurrence of a violation
is in dispute;
or
(3) the order is not intended
to become a part of a party's or a facility's compliance history." (Emphasis
added.) In September of 1995, when the commission began to use orders crafted
under the provisions of TWC, §7.070, (generally referred to as "1660
orders"), language was included stating that the occurrence of any violation
is in dispute and the entry of the agreed order shall not constitute an admission
by the respondent of any violation alleged in the order, nor of any statute
or rule, and further that the order is not intended to become a part of the
respondent's compliance history. The commission does not currently consider
1660 orders as a component of compliance history because of the language included
and the associated understanding between the parties that they will not be
considered for purposes of compliance history. Respondents in enforcement
matters may have, at least in part, made their decision to settle rather than
pursue an administrative hearing based on this language. In response to the
provision in TWC, §5.753(b)(2), the commission has modified the language
in 1660 orders being offered to respondents for settlement of applicable enforcement
matters to state that if the order is adopted prior to February 1, 2002, the
order is not intended to become a part of the respondent's compliance history.
The language, as noted previously in this preamble, has been modified to state
that the order will become a part of the respondent's compliance history if
it is approved by the commission on or after February 1, 2002. No change to
the rule has been made in response to this comment.
The commission would note that it also utilizes other orders not crafted
under TWC, §7.070, generally referred to as "findings orders." These
orders contain findings of fact and conclusions of law, and do not contain
the provision stating that they will not become a part of the respondent's
compliance history. Findings orders are used in some enforcement matters,
based on specific criteria, and these are currently considered as a component
of compliance history, and would continue to be included, even those adopted
prior to February 1, 2002, under the proposed rule. Further, the commission
would point out that the verbiage in TWC, §7.070, does not state that
NOVs which are the basis for orders issued under TWC, §7.070, shall not
be considered in a person's compliance history, and neither does the language
included in those orders; the commission currently considers, and will continue
to consider those NOVs as components of compliance history, and as such, the
violations contained in those orders will not be "lost" in compliance history
considerations.
BRA commented regarding proposed §60.1(b)(2), (adopted as §60.1(c)(2)),
stating that while it realizes that orders issued under TWC, §7.070 are
required by new TWC, Chapter 5, Subchapter Q to be included as components
of compliance history, "the record should note that this overrides the provision
in Section 7.070 that specifically states that such orders will not become
part of the party's compliance history."
The commission responds that the language in TWC, §5.753(b)(2), and
as included in the rule, speaks for itself. No change has been made in response
to this comment.
Regarding proposed §60.1(b), (adopted as §60.1(c)(2)), TMRA stated
that "Section 18.05 of HB 2912 does not clearly define when the beginning
of the compliance history evaluation period should begin. Although it could
be argued that §18.05(b) provides a basis for starting the evaluation
period on September 1, 2002, TMRA recognizes that §18.05(a) could be
interpreted as setting that date at February 1, 2002." TMRA went on to say
that "1660 Agreed orders issued before February of 2002 should not be included
in the five-year evaluation for the following reasons: .... As TNRCC has pointed
out in the preamble to the proposed rule, for at least the last five years,
agreed orders issued pursuant to Water Code §7.070 without findings of
fact and conclusions of law (a.k.a. '1660 Orders') have included the phrase
'this agreed order is not intended to become a part of the respondent's compliance
history.' Indeed, TNRCC Enforcement and Legal staff have emphasized this provision
in their form 1660 Orders in order to persuade respondents to settle who would
have otherwise been prepared to challenge TNRCC's allegations in a contested
case proceeding. TMRA therefore supports proposed §60.1(b)(2) as it excludes
from consideration 1660 Orders issued before the above-referenced February
1, 2002 effective date and that were negotiated on the assumption that they
would not be considered as part of the responding parties' compliance histories."
The commission appreciates the positive comment in support of the rule.
NTMWD stated that it supports proposed §60.1(b)(2), (adopted as §60.1(c)(2)),
in that it excludes 1660 orders issued prior to February 1, 2002. NTMWD further
stated that it bases this support on the language included in the orders,
adding, "In fact, 1660 Agreed Orders have been acceptable to respondents who
might otherwise have been prepared to challenge Commission allegations" due
to the existence "of this provision that the Order would not become a part
of respondent's compliance history."
The commission appreciates the positive comment in support of the rule.
ATINGP commented regarding proposed §60.1(b)(2), (adopted as §60.1(c)(2)),
stating, "This provision should be revised to provide that a 1660 order is
not a part of an entity's compliance history unless it is the result of an
enforcement action that was commenced after February 1, 2002. Otherwise, enforcement
actions that are on-going today will be caught in mid-stream with new rules
applying to them. Through no fault of their own, on-going enforcement actions
cannot be finalized in most cases before February 1, 2002 due to the process
of public notice and the Commission's agency posting timelines."
The commission disagrees with this comment. House Bill 2912 was enacted
in May of 2001, and the imminence of this requirement has been known. At the
time the language in the text of the commission's 1660 order was changed to
reflect that 1660 orders adopted on or after February 1, 2002, would be included
in a person's compliance history, there was ample time for a respondent to
settle the case in time to ensure it could be adopted prior to February 1,
2002. In fact, the agency has made efforts to accommodate as many respondents
as possible with regard to this issue. No change has been made in response
to this comment.
Regarding proposed §60.1(b)(2), (adopted as §60.1(c)(2)), TIP
stated, with regard to the proposed language stating that 1660 orders issued
on or after February 1, 2002 will become a component of compliance history,
"This requirement ignores the reality of the agreed order negotiation process
and will inevitably result in many orders being included as components of
compliance history resulting from violations that allegedly occurred long
before February 1, 2002. As a result, the TNRCC should modify this requirement
to include such orders that result from violations that allegedly occur on
or after February 1, 2002." TIP further stated, "More importantly, however,
proposed section 60.1(b) provides that '{t}he components of compliance history
as specified in this chapter shall apply to an action taken by the agency
on or after February 1, 2002.' Although this language is not entirely clear,
when read in the context of section 60.1(b)(2), it appears that the agency
intends to include in compliance history, compliance-related information resulting
from events that occurred prior to February 1, 2002. When the proposed five-year
compliance period is considered, compliance-related information from as far
back as February 1997 could be included in compliance histories under new
rules." TIP added, "At the time various agreements were entered into with
the TNRCC, including, but not limited to, enforcement orders and consent decrees,
companies could not have known that their decision would have such a significant
impact on future agency actions. Moreover, court judgments and criminal convictions
frequently involve settlement or plea decisions that may have been entered
into on different terms had the effect of the instant rules been known at
the time. As a result, basic fairness and due process require that the agency
only apply the new rules to events that allegedly take place after February
1, 2002. This 'clean slate' approach is supported by the underlying legislation.
Section 18.05 of HB 2912 only requires the TNRCC to establish the components
of compliance history prior to February 1, 2002. It does not support the agency's
attempt to apply new rules to events that allegedly occurred as long ago as
February 1997. To the extent the rules provide for such retroactive application,
the TNRCC should limit applicability to events that allegedly occur after
February 1, 2002. If the agency does not intend the current proposal to apply
retroactively, it should revise the proposed language to more clearly reflect
timing requirements, and include a discussion of timing in the preamble to
the final rule that clarifies such non-retroactive intent." Additionally,
in general, BP endorsed the comments submitted by TIP.
The commission disagrees with these comments. First, in response to the
comment regarding this requirement "ignoring the reality of the agreed order
negotiation process" and "inevitably resulting in many orders being included
as components of compliance history resulting from violations that allegedly
occurred long before February 1, 2002, the commission responds that HB 2912
was enacted in May of 2001, and the imminence of this requirement has been
known. The commission does not agree that it should modify this requirement
to include such orders that result from violations that allegedly occur on
or after February 1, 2002. With regard to the comments concerning the uncertainty
of the meaning of the first sentence in proposed §60.1(b)(2), now found
at adopted §60.1(a)(6), the commission responds that this language was
taken from HB 2912, §18.05(i), which states, "The changes made by this
Act in the definition of compliance history apply to an action taken by the
Texas Natural Resource Conservation Commission on or after February 1, 2002.
An action taken by the Texas Natural Resource Conservation Commission before
February 1, 2002, is governed by the law in effect on the date the action
is taken, and the former law is continued in effect for that purpose." The
commission recognizes that the proposed language has proven to be confusing,
particularly with regard to the use of the term "an action taken by the agency."
The "action" does not refer to the "actions" which constitute the components
of compliance history included in this subsection in paragraphs (1) - (13);
rather, it refers to the "actions" taken by the agency which require the development
and consideration of a compliance history as part of the decision-making process,
as specified in subsection (a) of this section. The commission did not intend
to imply that it would not look back to components of compliance history that
occurred during the five years prior to February 1, 2002, as it in fact does
intend to utilize components which occurred during the five years prior, except
as specified for NOVs and for orders issued under TWC, §7.070. As such,
the commission has modified the language to read, "Beginning February 1, 2002,
the executive director shall develop compliance histories with the components
specified in this chapter." Additionally, the sentence has been moved from
proposed §60.1(b) to adopted §60.1(a)(6) in order to put it in chronological
order along with the classification and use effective date of the next phase
of rulemaking, and to move it from the subsection on components to the subsection
on applicability for better organization and clarity. Further, the legislative
intent was not for a "clean slate" approach, as stated in comments provided
by Representative Bosse which can be seen in this preamble in the response
to comments concerning adopted §60.1(c)(7), which was proposed as §60.1(b)(7).
In fact, the legislative intent is for compliance history to include components
which occurred prior to the implementation of this rule, and further, since
the rule requires a five-year compliance period, then components which occurred
as far back as 1997 will be included. No changes have been made in response
to these comments.
§60.1(c)(3)
TIP commented regarding proposed §60.1(b)(3), (adopted as §60.1(c)(3)).
TIP commented that the EPA's Integrated Compliance Information System, and
its retrieval component, the Online Targeting Information System (OTIS) can
only be accessed by state regulatory agencies. TIP stated that since regulated
entities have no way of verifying the accuracy of this information, the OTIS
system should not be used. TIP commented that in the alternative, industry
should be given access to information from any source used to review it for
accuracy, and given the opportunity to correct any errors discovered. Additionally,
in general, BP endorsed the comments submitted by TIP.
The commission disagrees with this comment. The commission notes that while
the OTIS database may only be accessible to state regulatory agencies, the
compliance history data for regulated entities will be made available to the
public. The commission encourages regulated entities to verify the accuracy
of their compliance history information and use this opportunity to correct
any errors discovered. No change has been made in response to this comment.
BP commented regarding proposed §60.1(b)(3), (adopted as §60.1(c)(3)).
BP stated, "In the preamble, TNRCC indicates the EPA Integrated Compliance
Information System and its retrieval component, Online Tracking Information
System, will be used to retrieve enforcement information to identify violations
of environmental laws in other states. Any database utilized by TNRCC relating
to compliance history for companies in other states must be readily available
to the regulated party, as well as the TNRCC. In specific, the regulated party
should have not only the opportunity to review the information but also the
opportunity to make any necessary corrections to the database. Therefore,
we suggest that TNRCC add language in §60.1(b)(3) as follows: 'to the
extent readily available
to the regulated entity
, the executive director...'"
The commission does not agree with this comment. First, TWC, §5.753(b)(3),
states "to the extent readily available to the commission." Additionally,
the commission has no control over whether information maintained by other
agencies is readily available to the regulated entity. However, the commission
presumes that a regulated entity will maintain its own records pertaining
to actions taken against it by environmental regulatory agencies, and further
presumes that such information is also available to the regulated entity through
open records and/or public information requirements for governmental bodies
similar to those required in the State of Texas. Additionally, the commission
responds that it is willing to consider new, updated, or corrected information
in its decision making. If the regulated entity determines after a compliance
history is compiled that the information obtained through the EPA data system
is incorrect, the regulated entity can supply correct information. No change
has been made in response to this comment.
TCONR commented regarding proposed §60.1(b)(3), (adopted as §60.1(c)(3)).
TCONR commented, "In the preamble to the proposed rule, the agency explains
that it intends to rely entirely on the EPA Integrated Compliance Information
System (ICIS) and the Online Tracking Information System (OTIS) to obtain
federal and other state compliance history information. We are concerned about
the agency's reliance solely on what may be outdated, incomplete or otherwise
inadequate information concerning an entity's compliance in other jurisdictions.
The final rule should include provisions requiring regulated entities to supply
the TNRCC with the relevant enforcement orders, court judgments and criminal
convictions from other jurisdiction. The TNRCC rule should also allow the
agency to accept verifiable information from third parties about final actions
taken for violations of environmental laws in other jurisdictions."
The commission disagrees with this comment. First, TWC, §5.753(b)(3),
limits the inclusion of these as components of compliance history "to the
extent readily available...." The commission notes that the compliance history
data for regulated entities will be made available to the public. The commission
encourages regulated entities to verify the accuracy of their compliance history
information and use this opportunity to correct any errors discovered. No
change has been made in response to this comment. Additionally, the commission
will accept additional information from a third party in a hearing situation.
TIP commented regarding proposed §60.1(b)(3), (adopted as §60.1(c)(3)),
stating that it would require the TNRCC, to the extent readily available,
to include enforcement orders, court judgments, and criminal convictions relating
to violations of environmental laws of other states as a component of compliance
history. TIP acknowledged that this requirement is based on new TWC, §5.753,
but stated that the current proposed rule language is not sufficient to prevent
inaccurate, erroneous information originating from other jurisdictions from
becoming a part of an entities compliance history. TIP suggested that out-of-state
information should be given little weight relative to in-state information.
Additionally, in general, BP endorsed the comments submitted by TIP.
The commission disagrees with this comment. The commission notes that the
compliance history data for regulated entities will be made available to the
public. The commission encourages regulated entities to verify the accuracy
of their compliance history information and use this opportunity to correct
any errors discovered. Furthermore, the issue of "weighting" the components
of compliance history is outside the scope of this rulemaking, and will be
addressed in the next phase concerning the classification and use of compliance
history. No change has been made in response to this comment.
ACT, AECT, ICE, and ExxonMobil Refining commented regarding proposed §60.1(b)(3),
(adopted as §60.1(c)(3)). ACT commented that the rule proposes to rely
solely on the information on the ICIS and OTIS systems for federal and other
states' compliance history information. ACT stated that it also provides that
decisions made with data from these sources are not "voided" by the subsequent
discovery of enforcement orders, judgments, or other information not in the
database. ACT commented that they are deeply concerned that these databases
may be out-of-date or otherwise inadequately maintained by other states and
thus may lack the full information on compliance history of regulated entities
with operations in other states. ACT commented that this section must be amended
to: "(1) require the regulated entity whose compliance history is under review
to provide the TNRCC all enforcement orders, court judgments and criminal
convictions relating to violations of environmental laws of other states;
(2) provide that TNRCC will accept verifiable information from third parties
regarding enforcement orders, court judgments or criminal convictions relating
to violations of environmental laws of other states, Texas local governments,
and other Texas state agencies when reviewing an entity's compliance history
in undertaking an action subject to this chapter." ACT further stated that
to exclude this information would be arbitrary and capricious. Similarly,
AECT and ICE commented that they have concerns that a site's compliance history
has the potential to be inaccurate because the sources of information that
comprise such compliance history may be inaccurate and/or mistakes may be
made in the compilation of the information that comprises the site's compliance
history. One source of compliance history that AECT and ICE both stated they
understand "has questionable accuracy is the EPA Integrated Compliance Information
System and its retrieval component, Online Tracking Information System ("OTIS"),"
which the TNRCC states is what it intends to use as the source of information
regarding enforcement orders, court judgments, and criminal convictions relating
to violations of environmental laws of other states. To ensure that the compliance
history for a site is accurate, AECT and ICE both suggested "that the rules
and the associated preamble language provide that the person who owns or operates
a site" be provided with an opportunity to review and, if necessary suggest
corrections to "the compliance history the TNRCC has compiled" for the site
before it uses such compliance history in any way or has made it available
to the public. ExxonMobil stated that it is "concerned with the commission
use of a federal data-base to track enforcement orders, court judgments, consent
decrees etc. to which permit applicants are denied access to the information
contained. It is imperative that all information on which a facility/company's
compliance history will be judged must be available to the company."
The commission appreciates the concern raised by the commenters. The commission
responds as ISIS and OTIS are the only available comprehensive data system,
the commission believes that it is the appropriate source for compliance information.
A regulated entity currently has, and will continue to have, the ability to
submit (additional) information for consideration on behalf of a claim that
information included in its compliance history is inaccurate and/or erroneous.
A regulated entity is free, and in fact encouraged, to provide information
for consideration to correct inaccuracies at any time. With regard to compliance
histories being made "public," the commission responds that they are subject
to the Public Information Act. However, the information held by other states
as well as the EPA is not under the commission's control with regard to its
availability to the public, up until such time as the commission has such
information in its possession, nor is the commission responsible for or able
to correct such information as it resides under its area of jurisdiction.
The commission responds that it will utilize information obtained from other
jurisdictions and that it is a regulated person's responsibility to ensure
that any erroneous information is corrected by the entity with jurisdiction.
With regard to the comment stating that the regulated community should be
allowed constant access to the system for review of all aspects of compliance
history, the commission responds that above and beyond the fact that it must
adhere to the requirements of the Public Information Act, TWC, §5.1733,
requires electronic posting of information. Specifically, it states, "The
commission shall post public information on its website. Such information
shall include but is not limited to the minutes of advisory committee meetings,
pending permit and enforcement actions, compliance histories, and emissions
inventories by county and facility name." The agency is working towards this
goal as it develops, proposes, and adopts rules pertaining to compliance histories.
As soon as practicable, this information will be available via the agency's
web site. No changes have been made in response to these comments.
Cantey & Hanger commented regarding proposed §60.1(b)(3) (adopted
as §60.1(c)(3)). Cantey & Hanger commented, "The TNRCC has indicated
in stakeholders' meetings that Notices of Violation from other states would
not be considered in compiling an entity's compliance history. However, Proposed
Rule §60.1(b)(3) states that enforcement orders, court judgements and
criminal convictions relating to environmental violations in other states
will be utilized as components to the extent available to the Executive Director.
Due to the inconsistencies between states in environmental laws and enforcement
procedures, other states enforcement orders should not be utilized in determining
the compliance history for a regulated entity in the state of Texas."
The commission disagrees with this comment. TWC, §5.753(b)(3), specifically
requires the commission to include in the components of compliance history,
"to the extent readily available to the commission, enforcement orders, court
judgments, and criminal convictions relating to violations of environmental
laws of other states." Therefore, no change has been made in response to this
comment.
§60.1(c)(4)
Jones Day, Vinson & Elkins, and Thompson & Knight commented regarding
proposed §60.1(b)(4), (adopted as §60.1(c)(4)). Jones Day stated,
"The proposed component referencing 'chronic excessive emissions events' should
be defined in the rules." Vinson & Elkins stated, "Several critical terms
in these rules are not defined. Nowhere in the Phase I rulemaking is the term
'chronic excessive emissions event' defined. While 'emissions event' is defined
in HB 2912, what makes these emissions events 'chronic excessive,' and thus,
a component of a person's compliance history is left up to the TNRCC to define
in subsequent rulemaking or to interpret through policy or guidance." Thompson &
Knight stated that "the Agency should define what constitutes 'chronic' and
'excessive' emission events in this rulemaking. Without notice and comment
rulemaking to define these terms, the regulated community has no opportunity
to comment upon the agency's interpretation of the terms, which are not defined
by statute. We question whether an Agency's action can be legal if based upon
after-the-fact interpretation and application of such subjective terms."
The commission responds that this is outside the scope of this rulemaking.
The definition of "chronic excessive emissions events" will be addressed in
the second phase of compliance history rulemaking concerning classification
and use. No changes have been made in response to this comment.
Concerning proposed §60.1(b)(4), (adopted as §60.1(c)(4)), Vinson &
Elkins stated, "This rulemaking is the first effort at creating a 'uniform
standard for evaluating compliance history.' Such an objective necessarily
requires the definition of all critical terms. The term 'chronic excessive
emissions event' is not defined and is subject to arbitrary interpretation
by Executive Director staff. The term 'chronic' infers that excessive emissions
events occurred repeatedly over a span of time. The applicable span of time
and a threshold number of occurrences should be provided in 30 TAC §60.1(b)(4).
Excessive emissions events that occurred at the site under review during another
person's ownership or operation should be excluded from the current owner
or operator's compliance history. Excessive emissions that pose a threat to
human health or the environment will be in most cases subject to enforcement
by the agency and therefore included in the compliance history under section
(b)(1). The term 'chronic excessive emissions event' is not defined and should
be deleted. To achieve uniformity a vague, subjective and undefined standard
should not be included in the compliance history."
The commission responds that the definition of this term is outside the
scope of this rulemaking, and is being addressed in the second phase of compliance
history rulemaking concerning classification and use. However, with regard
to the proposal that excessive emissions events that occurred at the site
under review during another person's ownership or operation should not be
assessed in the current owner or operator's compliance history, the commission
has determined that there is no reason to treat this component of compliance
history any differently than any of the others. The rule states that compliance
history at the site will be assessed for the full five years, even if ownership
has changed during that time. Furthermore, the term "chronic excessive emissions
event" cannot be deleted from the rule, as THSC, §382.0216(j), created
in HB 2912, specifically requires that "the commission shall account for and
consider chronic excessive emissions events and emissions events for which
the commission has initiated enforcement in the manner set forth by the commission
in its review of an entity's compliance history." No changes have been made
in response to these comments.
TIP, BP, TABCC, and ExxonMobil Refining all made similar comments regarding
proposed §60.1(b)(4), (adopted as §60.1(c)(4)). TIP commented that
proposed §60.1(b)(4) "requires that 'chronic excessive emission events'
be considered a component of compliance history. However, the TNRCC has made
no attempt to define 'chronic' or 'excessive.' In addition, while TIP acknowledges
that HB 2912 requires the agency to include such events in a facility's compliance
history, excessive emission events that constitute violations will presumably
lead to notices of violations (NOVs) that will be included in a facility's
compliance history, resulting in duplicative information. If the agency intends
to postpone the development of a definition until the upcoming compliance
history use rulemaking, it should state as much in the preamble to the final
compliance history definition rulemaking." Additionally, in general, BP endorsed
the comments submitted by TIP. BP stated, "Chronic excessive emission events
should not be a 'stand-alone' component in the compliance history because
this would create potential double counting. If a facility had a chronic excessive
emission event, it is likely a notice of violation would be issued. Since
a notice of violation is proposed as a component of compliance history, including
both items would be redundant. Furthermore, TNRCC uses the term 'chronic excessive
emission event' without providing a definition. BP believes that such an event
must have off-site impact and be linked to documented, long-term, actual health
effects." BP went on to say, "In addition, TNRCC should clarify that spills
will not be considered as a chronic excessive emission event unless there
is sufficient volatility to create a sustained health impact." TABCC stated,
"While TABCC acknowledges that consideration of 'chronic excessive emissions
events' in compliance history is mandated by HB 2912, it appears that listing
it as a separate component in addition to notices of violations would result
in a duplication of 'negative' components in the formula. It is our understanding
that every chronic excessive emissions event would result in an NOV, so every
event would be counted twice: once as a chronic emissions event and once as
an NOV. We encourage the agency to clarify and address this in the formula
and the final rule." ExxonMobil Refining suggested that inclusion of "chronic
excessive emission event" is inappropriate as it will result in considering
an event that has already been addressed in an agreed order or other enforcement
action, and therefore recommended that it be deleted as duplicative.
The commission responds that the definition of this term is outside the
scope of this rulemaking, and is being addressed in the second phase of compliance
history rulemaking concerning classification and use. House Bill 2912, Article
5, makes it very clear that the legislature intends that regulated entities
address emissions. Additionally, THSC, §382.0216(j), created in HB 2912,
specifically requires that "the commission shall account for and consider
chronic excessive emissions events and emissions events for which the commission
has initiated enforcement in the manner set forth by the commission in its
review of an entity's compliance history." How chronic excessive emissions
events, as well as all the other compliance history factors, will be "weighted"
will be addressed in the next phase of compliance history rulemaking; however,
it is apparent from the statute that chronic excessive emissions events are
"stand-alone" compliance history components, and will be considered and weighted
accordingly.
TCC commented regarding proposed §60.1(b)(4), (adopted as §60.1(c)(4)).
TCC stated, "Proposed section 60.1(b)(4) includes chronic excessive emissions
events as part of compliance history. TCC believes that excessive emissions
events should be determined as such by heavier weighting on those events that
have significant impact on the human health or the environment and that the
other statutory criteria should have lighter weighting. There is nothing in
the statute that indicates that the items should be weighted equally. The
criteria for 'excessive emissions events' are provided by statute, but what
constitutes 'chronic excessive emissions events' is not specified. Thus, we
believe that 'chronic excessive emissions events' should only characterize
a situation where multiple 'excessive emissions events' occur each and every
year in the compliance history." Additionally, in general, BP endorsed the
comments submitted by TCC.
The commission responds that the definition of this term is outside the
scope of this rulemaking, and is being addressed in the second phase of compliance
history rulemaking concerning classification and use. Additionally, the comment
concerning the "weighting" of chronic excessive emissions events is outside
the scope of this rulemaking. Any issues regarding the weighting of components
will be addressed during phase II of the compliance history rulemaking, dealing
with the classification and use of compliance history. No changes have been
made in response to this comment.
Birch & Becker commented regarding proposed §60.1(b)(4), (adopted
as §60.1(c)(4)). The commenter stated, "The terms 'chronic' and 'excessive'
that are used in qualifying emission events are not defined by statute or
regulation, and it is unlikely that these terms will be defined prior to February
1, 2002. Since the terms ... have not yet been defined, it is impossible to
determine whether a facility is in compliance. Under HB 2912, the reporting
of chronic excessive emission events is not required until sometime after
January 1, 2003, which is the date by which TNRCC must make technical and
equipment changes that are necessary to collect and process the emissions
date. Chronic excessive emission events should not be used as components of
compliance history until these key terms are defined by regulation, and this
should be reflected in the text of the rule."
The commission responds that the definition of "chronic excessive emissions
events" will be addressed in the second phase of compliance history rulemaking
concerning classification and use. The commission is required by statute to
include this as a component of compliance history, but further responds that
chronic excessive emissions events will not be utilized as a component of
compliance history until such time as the concept is fleshed out in rule.
No changes have been made in response to this comment.
Brown McCarroll commented regarding proposed §60.1(b)(4), (adopted
as §60.1(c)(4)). Brown McCarroll stated that it "believes the term 'chronic
excessive emission events,' without TNRCC guidance, would likely lead to inclusion
of events that should not be part of the compliance history, especially a
negative component of it. For example, plant sources that are very complex
having numerous facilities will likely experience more upsets and unscheduled
maintenance, shutdown, or startup events resulting in unauthorized emissions,
than other, less complicated or complex sources. Thus, not all sources should
be compared in making a determination regarding whether an owner or operator
has had chronic excessive emission events. In making such determinations,
only similar sources with similar complexities should be compared, otherwise
the comparisons are highly inappropriate. Furthermore, some facilities may
present unique and complicated issues associated with preventing upsets, especially
as to protection of plant personnel safety, and protection of equipment. An
owner's or operator's corrective action efforts, which may include substantial,
costly equipment modifications and re-engineering, should also be taken into
account in making a chronic excessive emissions events determination. Consequently,
Brown McCarroll recommends that TNRCC provide guidance associated with this
compliance history component to clarify that such determination will be made
in comparison with similar types of facilities and sources with similar complexity.
Further, the agency should clarify that an owner's or operator's personnel
safety and plant equipment protection and appropriate corrective action efforts
will also be taken into account in such determinations."
The commission responds that this comment is outside the scope of this
rulemaking. The issues raised are issues that will be dealt with in the second
phase of compliance history rulemaking dealing with classification and use.
No changes have been made in response to this comment.
§60.1(c)(5)
Thompson & Knight, TIP, and ExxonMobil Refining commented regarding
proposed §60.1(b)(5), (adopted as §60.1(c)(5)). Thompson & Knight
asked what constitutes "information required by law or any compliance-related
requirement necessary to maintain federal program authorization?" Thompson &
Knight further commented, "To give the regulated community adequate notice
of what constitutes 'compliance history,' the rule must set out in reasonable
detail the scope of this component of compliance history. For example, the
Agency could provide a listing of the statutory and regulatory requirements
that are included in this provision. This is necessary given that this information
may be used to deny or terminate permits or deny a facility's participation
in certain regulatory programs." Similarly, TIP stated the proposed language
"provides that 'any information required by law, or any compliance-related
requirement necessary to maintain federal program authorization' be included
as a component of compliance history. TIP is not aware of any information
that might be included under this language. As a result, the agency should
provide examples of information that meets this requirement." Additionally,
in general, BP endorsed the comments submitted by TIP. Similarly, ExxonMobil
Refining recommended that this component be deleted. ExxonMobil Refining stated
that this language "is so vague, open-ended, and imprecise that we can not
determine any information that might be included under it."
The commission disagrees with this comment. This language is taken directly
from TWC, §5.753, which states, "The set of components must also include
any information required by other law or any requirement necessary to maintain
federal program authorization." It is included in the rule to ensure that,
should some new requirement be enacted, it is covered immediately, even without
updating this rule. Furthermore, it is included in case something has been
erroneously omitted in developing these rules. It is not intended to replace
any currently known requirement; rather it is intended as a "catch-all" as
previously described. No changes have been made in response to this comment.
ACT commented regarding proposed §60.1(b)(5), (adopted as §60.1(c)(5))
that it "should be clarified to explicitly include violations that are required
to be reported under federal programs being administered by the state, as
well as violations and enforcement actions by local governments that are enforcing
state or federal environmental laws (e.g. Harris County Pollution Control
District's enforcement program; municipal enforcement of pretreatment requirements,
etc.). This would include such items as discharge permit violations under
the TPDES program or deviation reports under the Title V program."
The commission disagrees with this comment. The commission responds that
"violations that are required to be reported under federal programs being
administered by the state, as well as violations and enforcement actions by
local governments that are enforcing state or federal environmental laws"
are already included, to the extent applicable, in other components as proposed
and adopted in this rulemaking. This language is included in the rule to ensure
that, should some new requirement be enacted, it is covered immediately, even
without updating this rule. Furthermore, it is included in case something
has been erroneously omitted in developing these rules. It is not intended
to replace any currently known requirement; rather it is intended as a "catch-all"
as previously described. No changes have been made in response to this comment.
§60.1(c)(6)
ACT commented regarding proposed §60.1(b)(6), (adopted as §60.1(c)(6)),
stating that it "should be modified to include the type of investigation (announced
or unannounced). This information is relevant to the likelihood that the investigation
would uncover violations."
The commission disagrees that this modification should occur. The violations
noted in any investigation will be incorporated into the compliance history,
regardless of whether it was an announced or an unannounced investigation.
Further, the underlying issue this raises is more relevant to the next phase
of compliance history rulemaking concerning classification and use. However,
the commission is not precluded from including such information about an investigation
in a compliance history by leaving the language "as is." No change has been
made in response to this comment.
7-Eleven, TPCA, and ICE commented regarding proposed §60.1(b)(6),
(adopted as §60.1(c)(6)), stating that it "should be clarified to only
incorporate in compliance history the dates of investigations 'conducted for
the purpose of determining compliance with environmental laws.'" ICE further
added, "The terms 'inspections' and 'investigations' as used in proposed §60.1(b)
appear to be interchangeable."
The commission disagrees with this comment in part. The commission asserts
that it is not necessary to clarify in the rule that the component only includes
investigations "conducted for the purpose of determining compliance with environmental
laws." This is implicit in the fact that all of the components only relate
to environmental laws. Additionally, the commission agrees that the words
"inspections" and "investigations" were erroneously used interchangeably in
the proposed rule. All references to "inspections" within the rule have been
changed to "investigations" for consistency.
Vinson & Elkins, Jones Day, and ATINGP commented regarding proposed §60.1(b)(6),
(adopted as §60.1(c)(6)). Vinson & Elkins stated that the reference
in proposed §60.1(b)(6) "should be to the dates of TNRCC inspections
rather than 'investigations.' An entity may be subject to an investigation
and not be aware of it." Similarly, Jones Day commented, "Throughout the proposed
rule package, there is interchangeable use of 'investigation and 'inspection.'
An inspection can be a positive, routine, even voluntary event. An investigation
implies that the agency has a reason to suspect wrong-doing. The Commission
should be deliberate in its use of these terms." Vinson & Elkins added
that "it should be made clear that internal company investigations (i.e. audits)
are not included." Similarly, ATINGP recommended that this language be clarified
to reflect that it is only applicable to investigations conducted by the TNRCC,
the EPA, or one of their delegated agents. Vinson & Elkins also stated
that "citizen complaints have been specifically excluded from the components
of compliance history. However, HB 2912 requires the agency to undertake an
investigation when it receives a citizen complaint. Without clarification,
citizen complaints could be included in a compliance history summary, despite
the deliberate exclusion. The Commission should clarify that investigations
initiated by citizen complaints are not included in compliance summaries by
virtue of..." the proposed paragraph.
The commission disagrees with this comment. The commission does not make
a distinction between "inspections" and "investigations" in the manner in
which the commenter suggests. As a matter of course, the individuals who work
in the commission's regional offices are referred to as "investigators" and
the checks they make at sites are referred to as "investigations." This is
simply the "term of art" used, and refers to all "checks" performed as used.
Additionally, the commission responds, regarding the dates of investigations,
that it is only referring to those investigations conducted by the agency
or its agents. With regard to citizen complaints, the commission responds,
as stated in the proposal preamble, that complaints are not specifically included
a component of compliance history, because other components would, in effect,
include pertinent aspects of this same information. For instance, a citizen
may file a complaint regarding an environmental incident. The executive director
will investigate, and if a violation is documented, then the executive director
will issue an NOV or initiate enforcement, as appropriate. Thus, the complaint
will be part of the compliance history via the NOV or commission order. The
commission notes that during the legislative process citizen complaints were
not included in HB 2912. Complaints were excluded from the compliance history
components, not to exclude any underlying violation(s), but in order to avoid
having potentially unverified, unverifiable, or stacked complaints counted
as a negative component of a person's compliance history. The agency currently
conducts an investigation in response to citizen complaints, and will continue
to do so. However, it will not be until a complaint is verified that the underlying
violation will be included in a person's compliance history. No changes have
been made in response to this comment.
AECT and TIP commented regarding proposed §60.1(b)(6), (adopted as §60.1(c)(6)).
AECT suggested that, in order to provide a better and more realistic perspective,
the language should be revised to read: "(6) the dates, durations, and types
of investigations." Similarly, TIP stated, "In addition to explaining what
types of activities the term 'investigation' is meant to include, the TNRCC
should note the
duration
of each investigation.
There is significant variation state-wide in the amount of time that inspectors
spend at a given site, even at sites of comparable size and complexity. An
investigation lasting three days is not comparable to an investigation lasting
three weeks. As a result, it is imperative that if the TNRCC intends to include
dates of investigations as a component of compliance history, it should also
include the duration of such investigations. In addition to the date and duration
of the investigation, compliance histories should include the reason behind
the investigation. Many different alleged occurrences, with considerable variances
in their relevance to compliance history, result in 'investigations.' Finally,
the agency should address in the preamble to the final rules how it intends
to consider investigations performed by multi-agency teams." Additionally,
in general, BP endorsed the comments submitted by TIP.
The commission disagrees with this comment. The emphasis is on whether
or not a violation was observed during the investigation, not on the duration
or type of, or reason for, investigations. Investigations can vary in duration,
type, and rationale for performance for many reasons, not just inconsistencies
among regional offices. The statute does not require specific information
regarding investigations (other than as they apply in their results as those
end up in notices of violations and/or enforcement orders, etc.) The commission
proposed to include this as a component of compliance history with the intention
of being able to reflect whether a lack of violations during the compliance
period was because no investigations had been performed during that time,
or rather that investigations were performed but no violations were found.
Because the emphasis in the statute is placed on violations discovered, and
because there are so many potential reasons for the differences in duration,
type, and rationale, no changes have been made in response to this comment.
With regard to investigations performed by multi-agency teams, the commission
will include only those investigations in which it, or one of its delegated
local authorities, is the lead investigator.
BP commented, regarding proposed §60.1(b)(6), (adopted as §60.1(c)(6)),
"Certain other components, such as ... item (6) the 'dates of investigations'
do not 'fit' with the component listing. These items are general information
useful in the compliance history but are not in and of themselves contributors.
TNRCC should reword accordingly."
The commission does not agree with this comment. The commission proposed
to include this as a component of compliance history with the intention of
being able to reflect whether a lack of violations during the compliance period
was because no investigations had been performed during that time, or rather
that investigations were performed but no violations were found. As such,
the commission has determined that it is appropriate to leave it within the
components of compliance history. No change has been made in response to this
comment.
§60.1(c)(7)
Representative Bosse commented regarding proposed §60.1(b)(7), (adopted
as §60.1(c)(7)). Representative Bosse stated that, as he understands
the proposed rule, "it would allow consideration of only those NOVs issued
on or after February 1, 2002. This is contrary to my intent, and I believe
the intent of the legislature, in arriving at the final version of HB 2912.
The Sunset Advisory Commission recommendation, as embodied in the filed version
of HB 2912 and as passed by the House, required consideration of all NOVs,
past and present. I supported (and support) this on the basis that the NOVs
make up a major part of the compliance record, and if only considered prospectively,
there would not be a meaningful history for a number of years. The Senate
Committee Substitute for HB 2912 provided for consideration of only future
NOVs. The specific language, at Section 17.05(a) of the bill, read: 'The use
of compliance history for the purposes established by Section 5.754, Water
Code, as added by this Act, apply only to violations that occur on or after
the effective date of the rules adopted under this subsection.' The provision
was removed by amendment on the Senate floor, however, and the prospective
limitation therefore did not appear in either the House or Senate version
of H.B. 2912." Representative Bosse further stated, "As further evidence of
legislative intent on this matter, you should consider that, when the conference
committee report was prepared, there was a drafting error and the prospective
language, exactly as cited above, appeared in the draft. Prior to having the
report signed by the conferees, and after conferring with most of them individually,
I had this provision removed with liquid paper. If you will review the original
conference committee report, you will notice this deletion in Section 18.05(a).
By comparing the adopted conference report with the original council draft
you will find that it is the 'clean slate' language that was deleted. NOVs
were included in determination of compliance history because we found that
they are reasonably reliable. We even included the safeguard of allowing removal
of NOVs determined to be without merit. I know of no policy that should excuse
violators from the consequences of their past violations. I trust that the
commission will follow the clear intent of the legislature and reject the
published language that would limit consideration to future NOVs."
The commission appreciates the comment provided by Representative Bosse.
In response to Representative Bosse's insight into the legislative intent,
the commission has modified the language in adopted §60.1(c)(7) to reflect
that all NOVs issued on or after September 1, 1999, will be included in a
person's compliance history. The commission acknowledges that for the first
two years the new compliance history rules are in place, NOVs will "lag behind"
the five-year compliance period for all other components (except for 1660
orders, as discussed previously in this preamble). However, the commission
has determined that this is the reasonable course of action for it to take,
and that as a compromise position, it addresses, at least in part, the concerns
of most commenters regarding this issue. First, information regarding NOVs
which is housed electronically via databases is only consistently available
in all program areas since the beginning of Fiscal Year 2000, starting September
1999. To include NOVs issued prior to this date, agency staff would have to
conduct manual file reviews for the 220,000 plus regulated entities and associated
sites in the state. From a resource perspective, this is not feasible with
the expectation that other agency functions would continue "as normal." Second,
with regard to the statute requiring that only NOVs "with merit" be included
in compliance histories, the commission points out that the Field Operations
Division implemented a Standard Operating Procedure in September of 1999,
which includes standardization of procedures for conducting investigation,
collecting evidence, issuing NOVs, follow-up, and many other issues, the commission
has a very high level of confidence that the majority of the NOVs issued since
that time are meritorious. Additionally, the commission has no control over
whether, or how many, regulated entities will now contest the merit of violations
included in prior NOVs due to the inclusion of them in compliance histories.
Based on the numbers, this could prove to be a monumental resource strain
for the commission in simply responding; however, by compromising to an initial
three-year prior history for NOVs, the commission is addressing the concerns
of those commenters who raised the "clean slate" issue while initially limiting
the number of years worth of NOVs which will be looked at to a shorter length
of time than the rest of the components. Additionally, this will limit the
potential resource strain on the agency because, first, the number of years
for (now) potential claims on the part of regulated entities that their NOVs
are unmeritorious, and second, the NOVs issued during that narrowed time are
more likely to be meritorious because of the implementation of procedures
by the Field Operations Division. The commission has determined that this
is a reasonable, do-able approach to a compromise position which addresses
everyone's concerns to at least some extent, without violating the requirements
of the enabling statute. Furthermore, not all violations alleged in NOVs from
September 1, 1997, to August 31, 1999, will be "lost" due to the exclusion
of NOVs issued prior to September 1, 1999. Specifically, if those violations
ended up being addressed through a findings enforcement order, they will be
included in a person's compliance history.
Representatives Burnam, Maxey, McClendon, and Puente commented regarding
proposed §60.1(b)(7), (adopted as §60.1(c)(7)). Representatives
Burnam, Maxey, and McClendon, and Puente all stated that the agency's proposal
to consider only those NOVs issued after February 1, 2002, effectively gives
regulated entities a "clean slate" for NOVs, and further stated that this
"clean slate" provision was specifically removed from HB 2912 during the session.
Representatives Burnam, Maxey, McClendon, and Puente stated that the "Clean
Slate Provision" was added by the Senate to its committee substitute of the
House Bill. Representatives Burnam, Maxey, and McClendon added that Senator
Harris corrected this problem with a floor amendment, which deleted this sentence.
Representative Maxey went on to say "There is no legitimate rationale for
TNRCC to ignore the will of the legislature." Representatives Burnam and McClendon
stated, "The agency's stated rationale for ignoring the will of the legislature
is flawed." Representatives Burnam, Maxey, McClendon added that agency has
been working on an enforcement tracking system for two years and they understood
it was to be online this fall. Moreover, they continued, "the law already
allows NOVs 'without merit' to be deleted from the compliance history." Representative
Puente stated that it is a clear indication of the legislature's intent on
this matter in that the provision was removed on the Senate floor and did
not appear in the final versions of HB 2912 in either the House or Senate.
He stated, "NOVs, past and present, make up an important part of an entity's
compliance history and if only considered prospectively, would not allow for
a meaningful review."
Representatives Burnam, Maxey, McClendon, and Puente further commented
that the proposed rule would not include NOVs issued by the EPA, even though
the statute makes "no distinction between state and federal NOVs." They all
stated that "NOVs issued by state or federal agencies within a minimum of
the past five years must be included in a compliance history."
The commission appreciates the comments provided by Representatives Burnam,
Maxey, McClendon, and Puente. In response to their comments regarding the
legislative intent, the commission has modified the language in adopted §60.1(c)(7)
to reflect that all NOVs issued on or after September 1, 1999, will be included
in a person's compliance history. The commission acknowledges that for the
first two years the new compliance history rules are in place, NOVs will "lag
behind" the five-year compliance period for all other components (except for
1660 orders, as discussed previously in this preamble). However, the commission
has determined that this is the reasonable course of action for it to take,
as stated in the response to Representative Bosse's comment regarding this
issue previously in this preamble. The commission's new tracking system is
currently being phased into use. However, the information being migrated into
it comes from all of the other, independent data tracking systems throughout
the agency. These other systems are not equivalent to each other, nor are
they as comprehensive as the new CCEDS. The commission can only migrate electronic
information into the new system that exists in the existing systems. Based
on the modification to this portion of the rule, requiring that NOVs issued
on or after September 1999 be included in compliance histories, the commission
is utilizing the electronic information from the last two years plus, which
is present in the existing systems and is being migrated into CCEDS.
Regarding the issue of including NOVs issued by the EPA in the components
of compliance history, TWC, §5.753(d) states, "the set of components
shall include notices of violations..." and goes on to say that "a notice
of violation administratively determined to be without merit shall not be
included in a compliance history." Nowhere in this language does it make reference
to NOVs issued by the EPA. Conversely, in §5.753(b)(1), the statute expressly
requires that "enforcement orders, court judgments, consent decrees, and criminal
convictions of this state
and the federal government
" be included as components of compliance history. (Emphasis added.)
Likewise, in §5.753(b)(3), the statute explicitly requires that, "to
the extent readily available to the commission, enforcement orders, court
judgments, and criminal convictions relating to violations of environmental
laws
of other states
" be included as components
of compliance history (emphasis added). Because the language in TWC, §5.753,
makes no reference to the inclusion of NOVs issued by the EPA, the commission
has determined that these should not be included as a component. The commission
holds that this position is further substantiated by the fact that the language
in TWC, §5.753, requires that only those NOVs with merit be included.
EPA's electronic tracking system does not reflect when a violation contained
in one of its NOVs has been determined to be without merit. And finally, the
commission does not have the opportunity to evaluate the merit of NOVs issued
by the EPA. Additionally, the EPA does not issue very many NOVs in the State
of Texas, and so there will not be that much information "lost" by not including
EPA NOVs. Therefore, the commission has determined that it is both appropriate
and reasonable to exclude EPA NOVs, and that this does not violate the requirements
of the enabling statute. No changes have been made with respect to this issue.
ACT, TCONR, and 17 individuals commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). The 17 individuals commented that the agency's
proposal to consider only those NOVs issued after February 1, 2002, effectively
gives regulated entities a "clean slate" for NOVs, and go on to say that this
"clean slate" provision was "specifically taken out of the bill during the
session." The individuals stated that this would essentially let plants "off
the hook for bad behavior." Similarly, ACT stated that "the rule fails to
require consideration of past notices of violation--even though that 'clean
slate' approach was
specifically
rejected
by the legislature." TCONR stated that "the proposed rule limits the inclusion
of notices of violation as a component of compliance history contrary to HB
2912 and undermines the legislative intent." TCONR stated that, with regard
to the proposal to consider only those NOVs issued on or after February 1,
2002, TWC, §5.753(d), merely states that the set of components shall
include NOVs. TCONR asserted that the legislature did not make any exception
other than for NOVs determined to be without merit, did not set a future date
for the agency to begin considering NOVs as a component of compliance history,
and did not give the agency discretion to do so. TCONR added, "Indeed, this
'clean slate' provision, which favors regulated entities, was deliberately
removed from HB 2912 during the legislative session. The language excluding
notices of violation issued prior to February 1, 2002 should be deleted from
the final rule and the rule should allow these notices of violation to be
components of compliance history as contemplated by the legislature." Similarly,
ACT stated that the proposal to only include NOVs issued on or after February
1, 2002, "is a blatant attempt to partially reinstate the 'clean slate' provision
of HB 2912 that was specifically rejected by the legislature. The 'clean slate'
provision was not in the House-passed version of HB 2912--it was added by
the Senate Natural Resources Committee. However, the Senate sponsor of HB
2912 specifically removed the provision during debate on the Senate Floor
(Amendment 1 to HB 2912), and it does not reappear in the conference committee
report that was approved by both the Senate and the House. No other provision
of HB 2912 provides a basis for the 'clean slate' approach to NOVs. Moreover,
the TNRCC's transparent attempt to rationalize this provision (i.e. the agency
needs time to track and set evaluation procedures for NOVs) has no basis in
law. Even if TNRCC cannot yet track NOVs via an automated database, that is
woefully insufficient basis upon which to ignore clear legislative intent."
ACT further commented that "the phrase 'on or after February 1, 2002' must
be removed from proposed §60.1(b)(7)."
The commission responds that it has modified the language in adopted §60.1(c)(7)
to reflect that all NOVs issued on or after September 1, 1999, will be included
in a person's compliance history. The commission acknowledges that for the
first two years the new compliance history rules are in place, NOVs will "lag
behind" the five-year compliance period for all other components (except for
1660 orders, as discussed previously in this preamble). However, the commission
has determined that this is the reasonable course of action for it to take.
Furthermore, the commission reiterates that not all violations alleged in
NOVs from September 1, 1997 to August 31, 1999, will be "lost" due to the
exclusion of NOVs issued prior to September 1, 1999. Specifically, if those
violations were addressed through a findings enforcement order, they will
be included in a person's compliance history.
GHASP and 509 individuals commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)), stating, "Notices of Violations (NOVs) are
critical to creating useful compliance histories. Instead of implementing
the law as written, the TNRCC is bowing to industry pressure by removing past
NOVs from the compliance history component list. TNRCC is not above the law.
When the state Legislature told the agency to include past NOVs in a company's
compliance history, they meant it. TNRCC has no authority to now go against
the Legislature's mandate and remove past violations from the list." One of
the individuals commented that this is illegal. One of the individuals commented
that, "not only is the TNRCC not above the law, it should be in the vanguard
of showing how a state agency can correct problems that are potentially harmful
to our citizen's health." One of the individuals further commented that the
commission should not accept a rule on compliance history that excludes past
NOVs or NOVs issued by the EPA.
The commission responds that it has modified the language in adopted §60.1(c)(7)
to reflect that all NOVs issued on or after September 1, 1999, will be included
in a person's compliance history. The commission acknowledges that for the
first two years the new compliance history rules are in place, NOVs will "lag
behind" the five-year compliance period for all other components (except for
1660 orders, as discussed previously in this preamble). However, the commission
has determined that this is the reasonable course of action for it to take,
as stated in the response to Representative Bosse's comment regarding this
issue previously in this preamble. As stated previously, the commission has
determined that this is a reasonable, do-able approach to a compromise position
which addresses everyone's concerns to at least some extent, without violating
the requirements of the enabling statute. Furthermore, the commission reiterates
that not all violations alleged in NOVs from September 1, 1997 to August 31,
1999, will be "lost" due to the exclusion of NOVs issued prior to September
1, 1999. Specifically, if those violations were addressed through a findings
enforcement order, they will be included in a person's compliance history.
The commission also responds that it is proposing these rules in an effort
to ensure that Texas will be a leader in addressing problems that are potentially
harmful to our citizens' health.
In response to the individual's comment that NOVs issued by the EPA should
be included in the components of compliance history, the commission reiterates
its response to a similar comment raised by Representatives Burnam, Maxey,
McClendon, and Puente earlier in this preamble. Specifically, the statutory
language does not support the inclusion of EPA NOVs, both because it makes
no reference to the inclusion of NOVs issued by the EPA, unlike specifics
included in other parts of the enabling language, and because the commission
cannot verify the merit of EPA's NOVs. Additionally, the EPA does not issue
very many NOVs in the State of Texas, and so there will not be that much information
"lost" by not including EPA NOVs. Therefore, the commission has determined
that it is both appropriate and reasonable to exclude EPA NOVs, and that this
does not violate the requirements of the enabling statute. No changes have
been made with respect to this issue.
TPWA, ICE, TxSWANA, NTMWD, and TMRA commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). All five commenters stated that they are supportive
of the commission's decision not to consider NOVs that were issued prior February
1, 2002. TPWA stated that it "believes that it would be unfair for the TNRCC
to change its draft rule to allow considerations of NOVs incurred in the past
and that doing so would be akin to retroactively changing rules. Prior to
the compliance history rule, certain NOVs were accepted even though the entity
believed them to be unmeritorious simply because paying the fine associated
with the NOV was less costly than contesting the merit of the NOV." TPWA,
NTMWD, and TMRA all expressed concerns that if those NOVs that entities considered
to be unmeritorious could now affect an entity's compliance ranking, entities
would seek to have those old NOVs declared unmeritorious. TPWA stated, "This
rush to prove that old NOVs lacked merit would, of course, be very difficult
and time-consuming on the part of both the entity and the agency." ICE expressed
similar concerns that the agency would "be overrun by entities seeking determinations
that existing NOVs are without merit." TxSWANA further added, "The sheer number
of such requests, coupled with the difficulty in proving or disproving issues
that occurred some time ago would drain the commission's resources at a time
when the commission is already overburdened with legislation implementation
issues." NTMWD and TMRA both stated that prior to this rulemaking, NOVs have
been issued inconsistently from TNRCC region to TNRCC region and even from
investigator to investigator. In addition, they added that NOVs, both written
and verbal, have not been tracked by a uniform system within the commission.
It is common practice "for a fully compliant entity to be issued an NOV that
it disagrees with" and that is resolved by providing additional information
or by taking certain actions. NTMWD and TMRA added that, in such circumstances,
the NOVs are rarely formally withdrawn or declared "without merit," stating
that in many cases it would be difficult, if not impossible, to recreate the
facts associated with an old NOV; thus, according to the commenters, seeking
a present-day determination that an old NOV was "without merit," as contemplated
by new TWC, §5.753(d), and the proposed rule will be practically impossible.
NTMWD and TMRA both commented that in order to be fair to the regulated community,
and ensure that the compliance period evaluation is an accurate reflection
of an entity's ability and willingness to comply, the commission should maintain
the current language of proposed §60.1(b)(7), which excludes NOVs issued
before February 1, 2002. TPWA, ICE, and TxSWANA similarly all recommended
that the commission should avoid making any changes to proposed §60.1(b)(7)
that would result in NOVs issued prior to February 1, 2002 being considered
in an entity's compliance history ranking.
The commission appreciates the positive comments in response to the rule.
However, the language in adopted §60.1(c)(7) has been modified to reflect
that all NOVs issued on or after September 1, 1999, will be included in a
person's compliance history. The commission has determined that this is the
reasonable course of action for it to take, and that as a compromise position,
it addresses, at least in part, the concerns of most commenters regarding
this issue. With regard to the statute requiring that only NOVs "with merit"
be included in compliance histories, the commission points out that the Field
Operations Division began implementing a Standard Operating Procedure in September
of 1999, which includes standardization of procedures for conducting investigation,
collecting evidence, issuing NOVs, follow-up, and many other issues, the commission
has a very high level of confidence that the majority of the NOVs issued since
that time are meritorious. Additionally, the commission has no control over
whether, or how many, regulated entities will now contest the merit of violations
included in prior NOVs due to the inclusion of them in compliance histories.
Based on the numbers, the commission agrees that this could prove to be a
monumental resource strain for the commission in simply responding; however,
by compromising to an initial three-year prior history for NOVs, the commission
is addressing the concerns of those commenters who raised the "clean slate"
issue while initially limiting the number of years of NOVs which will be looked
at to a shorter length of time than the rest of the components. Additionally,
this will limit the potential resource strain on the agency because, first,
the number of years for (now) potential claims on the part of regulated entities
that their NOVs are unmeritorious is less that the full five-year compliance
period for other components, and second, the NOVs issued during that narrowed
time are more likely to be meritorious because of the implementation of procedures
by the Field Operations Division. The commission has determined that this
is a reasonable approach to a compromise position which addresses everyone's
concerns to at least some extent, without violating the requirements of the
enabling statute. Additionally, the commission disagrees that this rulemaking
constitutes retroactive rulemaking. The commission responds that NOVs are
currently used in the compilation of compliance histories, in both permitting
and enforcement. House Bill 2912 clearly contemplates the agency developing
a compliance history period, and again, clearly directs the agency to "look
back in time." Furthermore, recipients of NOVs have always had the opportunity
to contest allegations contained in NOVs; this is not a new concept. In response
to HB 2912, the Field Operations Division developed a protocol for addressing
the contest of an allegation in an NOV; this is discussed previously in this
preamble. Any person may now contest violations alleged in NOVs issued on
or after September 1, 1999, utilizing the new protocol. However, the commission
cannot "define" a compliance "history" without looking back in time. Regarding
the comment that NOVs have not been tracked consistently, the commission has
determined that information pertaining to NOVs which is housed electronically
via databases, is consistently available in all program areas since the beginning
of Fiscal Year 2000, starting September 1999. Furthermore, any NOVs, or portions
thereof, determined to be without merit will be distinguished as such in the
database system, and will not be included in compliance histories. No changes
have been made in response to these comments.
TCFA commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating that it "agrees with proposed language to include only written NOVs
issued on or after February 1, 2002 as part of the compliance history. Since
an NOV is simply an allegation, TCFA urges the commission to exclude any NOV
that (1) is ultimately proven incorrect, (2) is the result of a minor violation
that can be easily corrected, (3) is dropped during the enforcement process
and (4) does not proceed to an Agreed Order."
The commission appreciates the positive comment in support of the rule.
However, the commission notes that the language as proposed has been modified,
as previously discussed in this preamble, and further, the commission disagrees,
at least in part, with the commenter's position on NOVs which should be excluded.
The commission agrees that NOVs determined to be incorrect (as in, without
merit) should not be included in a person's compliance history, and this is
required by the enabling statute. Regarding NOVs dropped during the enforcement
process, the commission responds that if they are dropped because the violations
are determined to be without merit, then those too are required to be excluded
from a person's compliance history. The commission does not agree that an
NOV which is "the result of a minor violation that can be easily corrected"
should be excluded. In fact, TWC, §5.754, requires that in the next phase
of compliance history rulemaking, the commission designate whether violations
included in a person's compliance history are of major, moderate, or minor
significance. This requirement conveys that minor violations must be included
in compliance histories. Additionally, the commission disagrees that NOVs
that do not proceed to an agreed order should, or can be, excluded from compliance
histories. The reasons for this are twofold. First, the enabling statute does
not limit the use of NOVs only to those that result in an agreed order, or
any other type of order for that matter (for example, a default order). Rather,
the statute requires that NOVs be included, after also requiring that enforcement
orders be included, unless the NOV is determined to be without merit. There
are many NOVs issued that do not result in any sort of formal enforcement
action, because the regulated entity timely corrects the problems. In such
an instance, the alleged violations contained within the NOV have been timely
TCC commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)).
TCC stated that it "agrees with proposed language to include only
written
notices of violation (NOVs) issued on or after February 1,
2002 as part of the compliance history." Additionally, in general, BP endorsed
the comments submitted by TCC.
The commission appreciates the positive comment in response to the rule.
But, the commission notes as discussed in previous response to comments that
the rule language has been modified to include NOVs issued prior to February
1, 2001.
TIP commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating that "the agency should only include NOVs in an entity's compliance
history if they result from violations that allegedly occur on or after February
1, 2002. This would ensure fairness by recognizing the speed at which the
negotiation process moves." Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission disagrees with these comments. First, in response to the
comment regarding the "speed of the negotiation process," the commission responds
that HB 2912 was enacted in May of 2001, and the imminence of this requirement
has been known. The fact that the allegations contained in an NOV occurred
prior to February 1, 2002, has no bearing on this matter; the decision on
the part of the respondent, at least in part, is one of deciding whether to
contest the merit of an NOV based on the fact that the NOV will be included
in any future compliance history determinations. Therefore, the commission
does not agree that it should modify this requirement to include only NOVs
that result from violations that allegedly occur on or after February 1, 2002.
Further, the legislative intent was not for a "clean slate" approach. No changes
have been made in response to this comment.
ExxonMobil Refining commented regarding proposed §60.1(b)(7), (adopted
as §60.1(c)(7)), stating that it "supports recent information received
from the Commission that NOVs from out-of-state, imposed upon non-Texas based
facilities will not be included as part of the Compliance History."
The commission appreciates this positive comment in support of the rule.
7-Eleven and TPCA commented regarding proposed §60.1(b)(7), (adopted
as §60.1(c)(7)), stating that it should be "clarified to only include
in compliance history 'notices of violation issued
by the TNRCC
....' Although the issue is discussed in the preamble to
the rule, the current rule language does not explicitly exclude NOVs by other
states and the US EPA."
The commission agrees with this comment, and has modified the language
from "...specifying each violation of
an
environmental
law..." to "...specifying each violation of
state
environmental law..." to help clarify this issue. The commission has
determined that it is not appropriate to limit the language to only those
NOVs "issued by the TNRCC" because NOVs can be issued by local authorities
on behalf of the agency, and further, as additionally clarified in modifications
to this language, written NOVs include those from a regulated person, such
as monthly effluent reports required by water quality permits.
TCONR and ACT commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)).
TCONR commented on the preamble to the proposed rule as it states that the
TNRCC intends to exclude NOVs issued by the EPA based upon the agency's claim
that it has "no opportunity to evaluate the merit of those notices of violation."
TCONR asserted that the "statute makes clear that components of compliance
history are to include enforcement actions by the federal government. Moreover,
the legislature did not make a distinction between notices of violation issued
by EPA and those issued by the state." TCONR stated that the agency is capable
of evaluating many EPA-issued NOVs to determine whether they are valid, and
added that even if the agency has a valid reason to reject some EPA NOVs,
it should not reject them all. TCONR asked, "What percent of EPA issued notices
of violation does the agency believe would be invalid? What is the nature
of these invalid notices of violation? Without disclosing this kind of pertinent
information to the public, the TNRCC has stated no valid factual basis for
this exclusion of EPA notices of violation." TCONR added that the legislature
created only one exception to the inclusion of NOVs, which is "for notices
that are
determined
to be without merit."
TCONR went on to say, "By adopting this exclusion, the agency would be
The commission disagrees with these comments. TWC, §5.753(d) states,
"the set of components shall include notices of violations..." and goes on
to say that "a notice of violation administratively determined to be without
merit shall not be included in a compliance history." Nowhere in this language
does it make reference to NOVs issued by the EPA. Conversely, in §5.753(b)(1),
the statute expressly requires that "enforcement orders, court judgments,
consent decrees, and criminal convictions of this state
and the federal government
" be included as components of compliance
history (emphasis added). Likewise, in §5.753(b)(3), the statute explicitly
requires that, "to the extent readily available to the commission, enforcement
orders, court judgments, and criminal convictions relating to violations of
environmental laws
of other states
" be included
as components of compliance history. (Emphasis added.) Because the language
in TWC, §5.753, makes no reference to the inclusion of NOVs issued by
the EPA, the commission has determined that there is no expressed intent that
these should be included as a component. The commission holds that this position
is further substantiated by the fact that the language in TWC, §5.753,
requires that only those NOVs with merit be included. Further, EPA's electronic
tracking system does not reflect when a violation contained in one of its
NOVs has been determined to be without merit. And finally, the commission
does not have the opportunity to evaluate the merit of NOVs issued by the
EPA. Additionally, the EPA does not issue very many NOVs in the State of Texas,
and so there will not be that much information "lost" by not including EPA
NOVs. Therefore, the commission has determined that it is both appropriate
and reasonable exclude EPA NOVs, and that this does not violate the requirements
of the enabling statute. No changes have been made with respect to this issue.
Plano commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)).
Plano stated that, in the preamble to the proposed rule, "the commission indicates
that it does not wish to include notices of violations issued by the EPA because
it does not have the opportunity to evaluate the merit of such notices of
violation." Plano noted, however, that this limitation is not included in
the verbiage of the proposed rule at §60.1(b)(7). Additionally, Plano
requested clarification regarding the phrase "except for those determined
to be without merit" as contained in proposed §60.1(b)(7). Plano stated
that it interprets this to mean that written notices of violations that have
been determined
by the TNRCC
to be unfounded
will not be included as a component of compliance history. (Emphasis added.)
Based on these concerns, Plano recommended that proposed §60.1(b)(7)
be amended to read as follows: "(7) all written notices of violation issued
on or after February 1, 2002, except for those issued by the EPA or those
administratively determined to be without merit by the TNRCC, specifying each
violation of an environmental law, regulation, permit, order, consent decree,
or other requirement."
The commission does not agree with this comment. First, the commission
responds that because the proposed language does not make specific reference
to NOVs issued by the EPA, whereas proposed §60.1(b)(1) does specify
that enforcement actions taken by the federal government are included, it
is not necessary to exclude NOVs issued by the EPA in the language. Furthermore,
as pointed out by the commenter, this issue is addressed in the proposal preamble,
and the commission has determined that this is adequate. Additionally, the
commission does not agree that it is necessary to specify in the rule that
the determination of the merit of an NOV is made by the agency. No changes
has been made in response to this comment.
TIP commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating that it is supportive of the commission's decision "not to consider
NOVs issued by EPA based on the fact that the agency has no way to evaluate
the merit of such notices. However, this logic also holds true for all out-of-state
violations of any type. While TIP acknowledges that the implementing legislation
requires the TNRCC to consider such violations, the agency's inability to
evaluate their merit necessitates that such matters be given very low weight
relative to in-state violations." Additionally, in general, BP endorsed the
comments submitted by TIP.
The commission appreciates the positive comment in support of the rule.
However, the issue of "weighting" is outside the scope of this rulemaking,
and will be addressed in the next phase of compliance history rulemaking concerning
classification and use.
WMT, PHA, and Vinson & Elkins commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). WMT commented, "There should be an independent
and fair process to determine when an NOV is 'without merit.'" WMT further
stated that, "in some instances the basis for the alleged violation is disputed.
This phase of the TNRCC compliance history rulemaking acknowledges that NOVs
may be 'administratively determined to be without merit' but it does not set
up a process for review of challenged NOVs." WMT went on to say that it "requests
that the TNRCC establish a review process outside of the normal enforcement
chain-of-command to review the issuance of NOVs in this phase or in the second
phase of compliance history rulemaking. Because NOVs will now have weight
in the evaluation of a facility for TNRCC actions, fairness dictates an unbiased
review process. WMT recommends that the TNRCC establish a system of review
that is external to the TNRCC enforcement group. An NOV review committee should
serve as an independent body in order to provide a consistency in analysis
and interpretation of requirements across the TNRCC regions. The recommended
NOV review process need not be cumbersome or complicated but it should be
without a predisposition. WMT submits that an NOV committee may even serve
to lessen the burden on TNRCC regional staff that will no doubt be challenged
more often as a result of the compliance history."
Similarly, PHA requested "clarification regarding how a given notice of
violation will be determined to be without merit including: (i) the circumstances
under which the merit of a notice of violation is called into question; (ii)
the process by which to obtain an administrative determination that a notice
of violation is without merit; and (iii) the factors that will be considered
by the agency in evaluating whether a notice of violation is without merit."
Vinson & Elkins recommended that the process for determining that an NOV
is without merit be established "and that this be made part of Phase 2 of
the rulemaking. An independent centralized review process will harmonize agency
interpretations and bring consistency to the TNRCC regional office activities."
The commission disagrees with these comments in part. Specifically, with
regard to the commenters assertion that NOVs will
now
have some weight in the evaluation of a facility for TNRCC actions,
the commission responds that NOVs are currently utilized in compliance histories
for both permitting and enforcement; this is not a new component. Further,
the commission does not agree that it is appropriate to set up a review process
external to the agency. Rather, the commission has determined that this process
must be internal. Additionally, the development and implementation of this
process is outside the scope of this rulemaking. As such, the Field Operations
Division developed a process as previously discussed in this preamble.
TPWA, ICE, AECT, TxSWANA, PHA, and Vinson & Elkins commented regarding
proposed §60.1(b)(7), (adopted as §60.1(c)(7)). ICE and AECT requested
that the commission commit to establishing a system to promptly and objectively
determine whether an NOV or an alleged violation in an NOV truly has merit.
AECT stated, "Under such system, if anyone requests that the TNRCC staff re-evaluate
whether an NOV or an alleged violation in an NOV has merit or if the TNRCC
staff becomes aware of information that may case doubt on the validity of
an NOV or alleged violation in an NOV, the TNRCC staff would be required to
promptly and objectively conduct such a re-evaluation." ICE and AECT both
added that, for any NOV or alleged violation in an NOV that is determined
to not have merit, they request that the TNRCC promptly designate in writing
that the NOV is without merit. TPWA stated that it "would support the consideration
of only those NOVs issued after the TNRCC develops a procedure for administratively
determining NOVs to be unmeritorious." TPWA, ICE, and TxSWANA stated that
HB 2912, §5.753(d), states that NOVs should be included within an entity's
compliance history, but that an NOV "administratively determined to be without
merit" should not be included. TPWA and TxSWANA both stated that they read
this language to require the TNRCC to establish an administrative process
for having NOVs declared to be unmeritorious. ICE and TxSWANA recommended
that this process be established by rule. TPWA, ICE, and TxSWANA all commented
that this process should be in place before NOVs should be included in an
entity's compliance history. TPWA and TxSWANA stated that "only those NOVs
that are issued after this process has been established could be factored
into a compliance history ranking." AECT added, "In addition to requiring
re-evaluation of NOVs that have already been issued, such a system should
also require that before the TNRCC issues any NOV, it must notify the responsible
entity of the apparent violation, allow that entity to present any information
that it may have to demonstrate that the apparent violation is without merit,
and objectively evaluate such information to confirm that the apparent violation
does have merit. This is important because for most NOVs that subsequently
would be determined to be without merit through the above-described system,
the information necessary to determine that they are without merit will be
available before the NOVs are issued, and if such information is provided
to, and evaluated by, the TNRCC staff before it issues the NOVs, the issuance
of most meritless NOVs will be avoided." Similarly, PHA requested "clarification
regarding procedure for removal of a notice of violation from a compliance
history including: (i) the circumstances under which a person could challenge
the inclusion of a notice of violation in a compliance history; (ii) the circumstances
under which the merit of a notice of violation is called into question; (iii)
the process by which to obtain an administrative determination that a notice
of violation is without merit; and (iv) the factors that will be considered
in evaluating whether a notice of violation is without merit." Vinson &
Elkins stated, "The reference in section (b)(7) should be to allegations of
violation of an environmental law since NOVs contain allegations not findings.
Further, the rule implements a statutory directive that NOVs that are 'administratively
determined to be without merit' should not be included in the compliance summary.
The Phase I rulemaking does not provide a mechanism or procedure by which
the merit of a NOV is considered. Nor does it specify the procedures by which
an NOV can be dropped from compliance history when the allegation is subsequently
not established. These procedures must be developed to so that the inclusion
of NOVs in a compliance summary is fair."
The commission responds that the protocol for determining the merit of
alleged violations contained in an NOV is specified in the previous response
to comment in this preamble. It includes, as suggested, that the regulated
entity be notified in writing whether the executive director agrees with the
merit of the allegations. The commission does not agree that only NOVs issued
subsequent to the initiation of this protocol be included in compliance histories.
First, the inclusion of NOVs in compliance histories is not a new process.
NOVs are currently included in compliance histories for both permitting and
enforcement. Furthermore, regulated entities have always had the ability to
contest the merit of allegations contained within NOVs, although such a process
has not previously been formalized. And finally, if anyone currently wants
to contest the merit of any prior NOVs, the new protocol may be utilized to
do so. The commission does not agree there should be a separate process for
"notifying" the regulated entity of the alleged violations prior to issuing
an NOV in order to allow the regulated entity to demonstrate that the allegation(s)
are without merit. This is the purpose of issuing an NOV. To initiate such
a process as suggested by the commenter would be redundant, at best. The apparent
concern of the commenter is that an NOV should not be issued until it has
been determined that the allegations contained in it have merit. However,
the commission points out that, once an NOV, or some portion thereof, is determined
to be without merit, the appropriate portion will be designated as "withdrawn"
and will not be included in subsequent compliance histories, as required by
the statute and stated in the rule. No changes have been made in response
to this comment.
TIP commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
citing "the need for the creation of a process to evaluate NOVs prior to their
consideration as a component of compliance history. Such a process would ensure
consistency and fairness in a process that is by no means uniform. For example,
TNRCC inspectors exercise considerable discretion when issuing NOVs. This
discretion results in tremendous variance among methods used to arrive at
the decision to issue an NOV. Moreover, an NOV may be issued for a single
event at one facility, while five or six events are included in a single NOV
for another facility. In addition, the process of determining the number of
days a violation allegedly occurred is rarely applied consistently. These
examples clearly support the need for the creation of a review process capable
of fairly comparing the weight to be given NOVs." Additionally, in general,
BP endorsed the comments submitted by TIP.
The commission disagrees with this comment. First, the commission responds
as it did in the previous response, that the process to evaluate NOVs prior
to their consideration as a component of compliance history is redundant,
at best. This is the purpose of issuing an NOV. The apparent concern of the
commenter is that an NOV should not be issued until it has been determined
that the allegations contained in it have merit. However, the commission points
out that, once an NOV, or some portion thereof, is determined to be without
merit, the appropriate portion will be designated as "withdrawn" and will
not be included in subsequent compliance histories, as required by the statute
and stated in the rule. Additionally, the commission responds that the statute
requires it to consider "violations" rather than "events," and further points
out that the issue of "weighting" violations will not be addressed until the
next phase of rulemaking concerning compliance history classification and
use. No changes have been made in response to this comment.
ATINGP, BRA, Thompson & Knight, and TIP commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). ATINGP stated that the "reference to NOVs 'administratively
determined to be without merit' should be clarified and a process for that
determination should be identified and created. Otherwise, what would be the
administrative process for determining the merits of the NOV? Due process
requires a formal appeal process. NOVs by themselves are merely the TNRCC's
allegations of violations. To rely on NOVs to make permitting or penalty decisions
prior to or without providing the right to a judicial or quasi-judicial appeal
to an unbiased third party would violate the due process rights of the alleged
violators. The opportunity to request a reconsideration of a NOV by the TNRCC
itself would not satisfy due process requirements." Similarly, BRA commented
that while it realizes that new TWC, Subchapter Q requires NOVs to be considered
as a component of compliance history, it believes this is a "serious due process
concern. An entity could receive several non-substantive notices of violation
that are never adjudicated and require no further action, and yet have these
notices come back as items to consider in a permit application. The practical
effect is to include accusations as part of the compliance record for consideration
during the permitting process." Thompson & Knight stated, "The rulemaking
should define what constitutes a written NOV 'administratively determined
to be without merit' and the procedures for obtaining such an administrative
determination. The agency should describe the types of documentation or action
that will suffice for an administrative determination that a notice of violation
is without merit. Will the mere fact that the agency does not proceed with
enforcement suffice? Will the Regions begin to issue letters that withdraw
a notice of violation? For many years, the Agency's practice has been to simply
not respond and take no further action once a client provides facts or law
that demonstrates that the situation alleged in a notice of violation was
not a violation. Typically, there is not enforcement action and no withdrawal
of the notice of violation. Depending on how the Agency defines 'notice of
violation,' it appears that such inaction will no longer suffice." TIP stated
that "exactly what constitutes an NOV should be redefined for purposes of
inclusion as a component of compliance history. Because NOVs are currently
thought of as mere allegations, issued without allowing the recipient a chance
to respond, inclusion of NOVs in a facility's compliance history is patently
unfair and may raise constitutional due process concerns. As a result, to
the extent the TNRCC is required by the underlying legislation to include
NOVs as a component of compliance history, the agency should implement a procedure
whereby NOVs are only issued after an investigation and response have taken
place and the matter is considered closed or settled. Currently, the TNRCC
does not have an efficient system to provide final closure to NOVs and associated
fines. Such a mechanism is critical to the success of the compliance history
program. If such procedures are not enacted, entities receiving NOVs will
be more likely to expend additional effort to challenge allegations contained
therein, which in turn will result in a substantial increase in agency resources
to defend such allegations." Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission responds, as recognized by two of the commenters, that it
is required by TWC, §5.753(d), to include NOVs as a component of compliance
history. However, the statute further requires that NOVs determined to be
without merit shall not be included in a compliance history. An NOV, or at
least some portion of it, will be determined to be without merit when the
regulated entity can provide additional information to demonstrate that the
allegation(s) included were cited in error, or in other words, show that the
violation(s) did not occur. The commission would point out that this is very
distinct and different from showing that the alleged violations have been
corrected, or "resolved." Resolving a violation does not mean that the NOV
was without merit. The process which the executive director will use for addressing
contested NOVs is provided for previously in this preamble. Additionally,
the "mere fact that the agency does not proceed with enforcement" will not
suffice in reflecting that an NOV is without merit. Not all NOVs issued by
the executive director result in enforcement actions; therefore, this is not
an appropriate method of determining "merit." No changes have been made in
response to these comments. Furthermore, "fines" or administrative penalties
are never directly associated with an NOV. Rather, they are assessed as a
result of an enforcement action. The commission does not agree that any additional
procedures other than those already outlined in this preamble need to be put
in place in order to reduce review of allegations. Rather, the commission
believes that regardless of procedures implemented, regulated entities will
be more likely to contest violations alleged in NOVs; it is only a matter
of where in the process, whatever the process. No changes have been made in
response to these comments.
Thompson & Knight commented regarding §60.1(b)(7), (adopted as §60.1(c)(7)),
stating, "A 'notice of violation' should not include any allegation within
a Notice of Violation letter that is noted as a 'resolved violation' or 'violation
deemed resolved.' A resolved violation typically relates to a circumstance
for which the investigator initially had insufficient information to confirm
compliance, but which was subsequently answered to the investigator's satisfaction.
Our experience is that a resolved violation may involve questions of fact
or law. Such situations should not be deemed a 'notice of violation' and become
part of a facility's compliance history where the law or facts ultimately
demonstrate to the agency's satisfaction that the violation was resolved prior
to issuance of the letter." Thompson & Knight further stated that if "the
agency will deem each 'resolved violation' to be a 'notice of violation,'
there must be a mechanism by which an entity can challenge a resolved violation.
Currently, a regulated entity has little incentive to take a resolved violation
to an enforcement hearing. Once the TNRCC has implemented the new compliance
history program, there will be a strong incentive to challenge 'resolved violations'
if they are deemed to be a 'notice of violation' and this part of the entity's
compliance history. Further, it has been our experience that some Regions
issue 'notices of violation' for unresolved violations as an information-gathering
device when the agency has insufficient information to confirm compliance.
We urge the TNRCC to cease using notices of violation in this manner, and
to adopt a new practice of issuing requests for information in an effort to
confirm compliance or noncompliance prior to issuing a notice of violation."
The commission disagrees with the comment. An NOV, or at least some portion
of it, will be determined to be without merit when the regulated entity can
provide additional information to demonstrate that the allegation(s) included
were cited in error, or in other words, show that the violation(s) did not
occur. The commission would point out that this is very distinct and different
from showing that the alleged violations have been corrected, or "resolved."
Resolving a violation does not mean that the NOV was without merit. The commission
does not agree with the commenter's assertion that a "resolved violation"
is typically related to a circumstance for which the investigator initially
had insufficient information to confirm compliance. This example constitutes
a violation which would be withdrawn subsequent to the submittal of information
showing that it had been cited in error. The process which the executive director
will use for addressing contested NOVs is provided previously in this preamble.
The commission points out that, once an NOV, or some portion thereof, is determined
to be without merit, the appropriate portion will be designated as "withdrawn"
and will not be included in subsequent compliance histories, and further will
be removed from a compliance history if it has already been included in one,
as required by the statute and stated in the rule. Further, the language at
adopted §60.1(c)(1) has been modified by adding the word "final" in front
of the reference to enforcement orders, to reflect that draft settlement offers
and those orders not yet approved by the commission will not be included in
compliance history. No changes have been made in response to this comment.
Brown McCarroll commented regarding proposed §60.1(b)(7), (adopted
as §60.1(c)(7)), stating that it believes "very strongly that the regulated
community is entitled to and should be provided clearly articulated guidance
on how its members may seek 'without merit' determinations in the event of
confusion or misinterpretations of the facts and an objective, procedural
forum for appealing minor, contested NOVs, without having to commit the time
and resources the contested case hearing process would warrant." Brown McCarroll
stated, as an example, that it understands the commission's "distinction between
NOVs that are 'resolved' (i.e., violation corrected) and those that are 'withdrawn.'
As part of the guidance and procedures we envision, if the TNRCC considers
an Agency correspondence withdrawing an alleged violation to be 'administratively
determined to be without merit,' the guidance could clarify this point." Additionally,
Brown McCarroll stated that it believes that there should be a mechanism "to
obtain objective determinations on no merit appeals for minor, contested NOVs,"
as "most NOVs ... contain allegations of minor violations that would not merit
being challenged pursuant to the contested case hearing process. In the past,
companies simply made changes that the TNRCC inspector requested as a result
of these types of minor alleged violations, even if the company disagreed,
in order to stay on good terms with the inspector and settle the matter in
the most efficient manner possible. With the new rules, even minor, questionable
NOVs will be held against the company, which will prompt companies to challenge
every questionable NOV, no matter how trivial it may be. We believe that this
is the situation the Sunset Legislation has left the regulated community and
TNRCC." Brown McCarroll went on to say, "We realize that there is an informal,
Region-based process currently in place, but we believe it lacks objectivity
in that one of the primary decisionmakers in making such a determination on
a contested NOV is the inspector. We believe that the current procedures should
be augmented or overhauled to provide for an appeal process to an objective
decisionmaker within the Agency, such as a supervisor from the Region, at
a minimum, and/or personnel from TNRCC headquarters in Austin."
The commission responds that it has provided previously in this preamble
the new, formalized mechanism for how NOVs will be determined to be without
merit. All appeals of NOVs issued by the FOD will be handled utilizing the
same protocol. Further, the commission has stated in this preamble the distinction
it makes between "resolved" violations and those determined to be "without
merit." Finally, the commission would like to reiterate that the inclusion
of NOVs in compliance histories is not a new process. NOVs are currently included
in compliance histories for both permitting and enforcement. Furthermore,
regulated entities have always had the ability to contest the merit of allegations
contained within NOVs, although such a process has not previously been formalized.
Thompson & Knight commented regarding §60.1(b)(7), (adopted as §60.1(c)(7)),
posing the question, "Are contested violations 'notices of violation' that
will become part of the compliance history while the contest is pending?"
The commission responds that an NOV will be included as a component of
compliance history until such time as it is determined to be without merit.
BP commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating, "The use of NOVs as a component of compliance history should be incorporated
in a fair and equitable manner. In specific, TNRCC should give consideration
to redefining the NOV because current NOVs are
allegations
without recipient response. Therefore, inclusion of these allegations
in the compliance history is unfair. In addition, more than one NOV is frequently
issued for the same alleged violation resulting in double counting of violations
for purposes of the compliance history. Again, this creates potential fairness
issues if such redundancies are considered."
The commission disagrees with this comment. The statute requires the inclusion
of NOVs. Also, if subsequent NOVs are issued, it is because the violation
has not been shown to have been corrected. If the NOV was issued in error
(i.e., the regulated entity can show that the violation in fact did not occur,
or in the case of a subsequent NOV, that it had been corrected prior to the
issuance of the subsequent NOV, then this NOV would be "without merit" and
would not be considered for purposes of compliance history. Further, the definition
of NOVs is outside the scope of this rulemaking. No changes have been made
in response to this comment.
ExxonMobil Refining commented regarding proposed §60.1(b)(7), (adopted
as §60.1(c)(7)), recommending that "in-state NOVs issued to Texas based
facilities, if they are required by statute to be included as a component
in the compliance history, should be redefined. An NOV is an allegation of
violation, there has been no investigation and no rebuttal. TNRCC should redefine
to its inspectors that NOVs are to be issued only after there has been investigation
and the facility personnel have had an opportunity to respond to the allegations."
The commission responds that this comment is outside the scope of this
rulemaking.
Thompson & Knight commented regarding §60.1(b)(7), (adopted as §60.1(c)(7)).
Thompson & Knight stated, "What constitutes a 'notice of violation' for
purposes of compliance history must be addressed by the Agency in this rulemaking.
Absent a definition of this key term, the rulemaking is flawed because it
fails to provide adequate notice of the components the agency will consider
when making decisions on whether to issue or terminate permits or allow the
regulated community to participate in certain regulatory programs. For example,
currently a notice of violation is a letter that may include numerous resolved
and unresolved alleged violations." As a starting point, Thompson & Knight
suggested, "A 'notice of violation' is a violation of statutes or rules under
the jurisdiction of the TNRCC as alleged in a letter expressly identified
as a "Notice of Violation' issued by the TNRCC or in an Executive Director's
Preliminary Report (EDPR). If the TNRCC alleges a violation for the same event
in both a Notice of Violation letter and EDPR, the event should be counted
as a single notice of violation."
The commission responds that, through the modifications made to the language
in adopted §60.1(c)(7), at least some of the commenters concerns are
addressed. The language has been modified to read, "all written notices of
violation, including written notification of a violation from a regulated
person, issued on or after September 1, 1999, except for those administratively
determined to be without merit specifying each violation of state environmental
law, regulation, permit, order, consent decree, or other requirement." Specifically,
even as proposed, it only included written NOVs. It has now been modified
to clarify that this includes self-reported violations submitted by regulated
entities. It does include NOVs submitted by a regulated entity subsequent
to performing an audit under the Texas Audit Act; however, as required by
the Texas Audit Act, these violations will be designated as being voluntarily
disclosed. With regard to resolved and unresolved violations being included
in NOVs, this is true in some instances. However, it has no bearing on whether
or not violations included in an NOV will be included in a compliance history.
The only thing that excludes something included in an NOV from inclusion in
a compliance history is the fact that a violation is determined to be without
merit. "Without merit" means that it is determined that the violation(s) were
cited in error; in other words, they did not occur. A resolved violation is
one that has been corrected. Furthermore, the commission does not agree that
violations included in both an NOV and an EDPR should be counted as a single
violation. The statute requires that violations must be considered; it does
not require that "events" be considered. Furthermore, an NOV is issued subsequent
to an investigation. An EDPR, if issued, is issued later in the enforcement
process. The violations contained in any commission order that resulted from
an EDPR would be included in a compliance history. The statute specifically
requires that both NOVs and enforcement orders be considered in the components
of compliance history.
ACT commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating that "this section should be clarified to include all violations that
are 'self-reported' to the agency: self-reported violations are essentially
equivalent to (and clearly as meritorious) as notices of violation issued
by the agency."
The commission agrees with this comment. The commission has modified the
language in adopted §60.1(c)(7) to include written notification of a
violation from a regulated person.
Canty & Hanger and Thompson & Knight commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). Cantey & Hanger commented, "There have
been indications that the TNRCC is working with the EPA to be able to issue
NOVs automatically any time a violation of a permit is alleged and that the
NOV would count towards compliance history. The NOVs should not be included
in a regulated entity's compliance history unless and until the NOVs have
been found to have merit, i.e. either through an agreed order or a successful
TNRCC contested case hearing or other adjudication. At a minimum, a formal
process of appealing NOVs should be established if the TNRCC intends to count
NOVs toward compliance history." Similarly, Thompson & Knight stated,
"The Agency has indicated that it is planning to issue a notice of violation
for every reported exceedance, such as may be noted in discharge monitoring
reports, opacity reports, deviation reports and similar documents submitted
to the agency pursuant to regulatory requirements. If that is, in fact, the
Agency's intent, we believe that the Agency should give fair notice to the
regulated community that these deviations will not become a part of their
compliance history. Further, we question whether it is appropriate for the
Agency to use HB 2912 in this manner. In promulgating HB 2912, the Legislature
did not intend to increase the instances in which the Agency issues a notice
of violation and institutes enforcement. Rather, the Legislature intended
to 'create a uniform
standard for evaluating
compliance history.' A new incentive to increase the number of notices is
not consistent with the statutory intent. Any plan to issue a 'notice of violation'
for routine self-reporting has not been well thought out and is rife with
problems. For example, new source performance standards (NSPS) require as
little as a three percent limit for opacity for some industries. The NSPS
performance standard for opacity monitors, PS-1, allows as much as seven and
one-half percent inaccuracy for monitors that comply with the specification...
Is it the Agency's intent to issue a notice of violation for each reported
exceedance of the 6-minute standard?"
The commission does not agree with this comment. In stakeholder meetings,
staff discussed the possibility of sending an NOV in response to a notice
of violation from a regulated entity. However, the commission modified adopted §60.1(c)(7)
to include the notification itself as an NOV. For example, water quality permits
require that permit compliance be reported by the permittee, on a monthly
basis. The commission questions the need to contest a self-reported violation.
However, any such NOVs would be subject to the same protocol for contesting
NOVs as any other NOV issued by the agency. No changes have been made in response
to this comment.
TCGA commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)).
TCGA expressed concern with the use of NOVs in compliance history. TCGA stated,
"While we understand that these will be used, we also believe that it is extremely
important to carefully weigh their use for compliance history. Under the proposed
rules, we are very concerned that a small business with a few minor violations
may find themselves moving into a lower tier. The severity of the violation,
and the promptness of response to the violation must be carefully weighed
during this process, or smaller businesses may be unfairly impacted by this
rulemaking."
While the commission appreciates the concern raised by the commenter, the
commission responds that the issue of the weight of an NOV is outside the
scope of this rulemaking. Weighting will be addressed through the next phase
of compliance history rulemaking concerning classification and use. No change
has been made in response to this comment.
TABCC commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
stating that while it understands that under HB 2912, NOVs will be considered
in compliance history, it also believes "that the agency's consideration of
NOVs will be the most important factor in the determination of compliance
history. We are particularly concerned that limitations on resource and infrequency
of inspection might result in a disparate impact on small business. Under
the proposed rules, a small business with a few minor violations may find
itself moving into a lower tier with limited means and opportunity for improvement."
The commission responds that the comment is outside the scope of this rulemaking.
The issue of number and complexity of NOVs is to be addressed in the next
phase of compliance history rulemaking, as is the classification and use of
compliance history. No changes have been made in response to this comment.
Jones Day commented regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)).
Jones Day commented, "NOVs, like out-of-state information, should be given
less weight as a component of compliance history. Of course, resolved NOVs;
i.e., those determined to be without any merit, should be given no weight
at all."
The commission responds that the issue of weighting the components of compliance
history is outside the scope of this rulemaking, and will be addressed in
the next phase of rulemaking concerning the classification and use of compliance
history. Additionally, the commission reiterates its distinction between "resolved
NOVs" and those determined to be "without merit." An NOV, or at least some
portion of it, will be determined to be without merit when the regulated entity
can provide additional information to demonstrate that the allegation(s) included
were cited in error, or in other words, show that the violation(s) did not
occur. The commission would point out that this is very distinct and different
from showing that the alleged violations have been corrected, or "resolved."
Resolving a violation does not mean that the NOV was without merit. No changes
have been made in response to this comment.
Brown McCarroll, TCFA, TIP, and TCC commented regarding proposed §60.1(b)(7),
(adopted as §60.1(c)(7)). Brown McCarroll stated that it believes the
potential for double-counting is important relating to consideration of NOVs.
"In many situations, NOVs are resolved without agreed orders, which are also
counted as a component of compliance history. With the added importance given
to consideration of compliance history in TNRCC decisionmaking, we do not
believe that NOVs that are also included in orders should also be included
as a component of a compliance history. Double-counting in this respect is
unfair and distorts the true nature of a company's compliance history. Another
instance of NOV double-counting involves situations where a permit or other
authorization by the TNRCC incorporates a TNRCC rule provision. Violation
of the rule should not result in two violation events. Similarly, under the
Title V permitting program, for example, a violation of an air quality rule
could result in violation of an incorporated new source review ('NSR') permit
along with the Title V permit, resulting in a single non-compliance event
resulting in three violations. We strongly recommend that the TNRCC provide
guidance confirming that it would not double- or triple-count NOVs as compliance
history components in such situations." Similarly, TCFA stated that "{m}any
NOVs provide multiple citations for a single incident and we believe that
a process should be put in place to avoid double or more counting of a single
violation. An example of this is an NOV citing a section of the Texas Clean
Air Act and a TNRCC rule for a single failure." TIP stated that "more than
one NOV is frequently issued for the same alleged violation (for example,
where a special permit condition and a federal requirement are both implicated
in a single noncompliance). Again, this creates obvious fairness issues and
may raise constitutional due process concerns when NOVs are included as a
component of compliance history. To the extent the agency believes it is required
to consider NOVs, their unproven nature mandates that they be given very little
weight relative to other compliance history components." Additionally, in
general, BP endorsed the comments submitted by TIP. TCC stated, "We do want
the agency to realize that many NOVs provide multiple citations for a single
incident and believe that a process should be put in place to avoid double
or more counting of a single violation. An example of this is a NOV citing
a section of the Texas Clean Air Act and a TNRCC rule for a single failure.
Another example would be including the same violation as an NOV and a subsequent
order." Additionally, in general, BP endorsed the comments submitted by TCC.
Thompson & Knight stated, "Often, the TNRCC asserts that a single event
violates several regulatory and/or statutory provisions. In such instances,
we believe that the event should constitute a single 'notice of violation.'
We ask that the Agency address this issue in the definition of 'notice of
violation.'"
The commission responds that the statute requires it to consider "violations"
rather than "events," and that in fact, due to the fact that the statute requires
both NOVs and enforcement orders to be included as components of compliance
history, it contemplates the same violation being included in both. The commission
reiterates that the FOD is implementing a new protocol for addressing the
contest of an NOV, as described in detail previously in this preamble. Additionally,
the statute requires that any NOVs determined to be without merit not be included
in compliance histories. Further, the statute requires the commission to designate
violations as either major, moderate, or minor in significance. However, the
designation of major, moderate, and minor significance and the "weighting"
of violations will be addressed in the next phase of rulemaking concerning
the classification and use of compliance history. No changes have been made
in response to this comment.
Fort Worth recommended regarding proposed §60.1(b)(7), (adopted as §60.1(c)(7)),
that "a component of compliance history not be a component that an entity
is working on long-term to correct," citing as an example a sanitary sewer
overflow that is unpreventable, stating that it should not be considered a
component for a bad compliance history.
The commission disagrees with this comment. If a violation cited in an
NOV is determined to have merit, then it will be included as a component of
compliance history, in accordance with the requirement of the statute. No
changes have been made in response to this comment.
§60.1(c)(8)
TPWA and TxSWANA commented regarding proposed §60.1(b)(8)), (adopted
as §60.1(c)(8)), stating that the compliance history rule should specifically
"exclude violations voluntarily disclosed under the Texas Environmental, Health,
and Safety Audit Privilege Act (Texas Audit Act) from the compliance record
to be considered by the Executive Director. The Texas Audit Act states that
a 'regulatory agency many not adopt a rule or impose a condition that circumvents
the
purpose of this Act
.' (Emphasis added.)
The
purpose of the Act
--that purpose that
cannot be circumvented--it 'to encourage voluntary compliance with environmental
and occupations health and safety laws.'" TPWA and TxSWANA both stated that
they believe "that if voluntarily-disclosed violations can be used against
an entity, then entities will be discouraged from voluntarily participating
in the Texas Audit Act" and that this circumvents the purpose of the Texas
Audit Act. TWPA and TxSWANA both stated that they believe, therefore, that §11
prohibits the TNRCC from using voluntarily-disclosed violations against an
entity when compiling the entity's compliance history. TPWA and TxSWANA further
added that Texas Audit Act , §10 affords "immunity" to an entity that
makes a voluntary disclosure of a violation. The commenters asserted that
if voluntarily disclosed violations are allowed to negatively influence an
entity's compliance ranking, then the "immunity" will no longer be absolute;
the entity might be "immune" from having to pay the specific penalty associated
with the disclosed violation, but the entity would not be "immune" from the
potentially more severe consequence of being ranked lower and therein being
denied a permit or some incentive based on the inclusion of that violation
in its compliance record. TPWA and TxSWANA both stated, "The repeal of 'immunity'
would discourage entities from voluntarily disclosing violations and this
would circumvent not only the general purpose of the Texas Audit Act, but
also an express provision of the Texas Audit Act. This is prohibited under
section 11 of the Texas Audit Act."
The commission does not agree that the results of an environmental audit
should be excluded from compliance history. The commission acknowledges that
the Texas Audit Act, §5, grants a limited evidentiary privilege for audit
reports developed according to the statute. The Texas Audit Act also provides
for immunity from administrative and civil penalties relating to certain self-disclosed
violations. Nothing in the proposed rule is intended to alter or limit any
privilege or immunity provided in the Texas Audit Act. However, the Texas
Audit Act, §10(i) states, "A violation that has been voluntarily disclosed
and to which immunity applies must be identified in a compliance history report
as being voluntarily disclosed." Therefore, violations voluntarily disclosed
pursuant to an audit performed under the Texas Audit Act must be considered
as part of an entity's compliance history. Furthermore, the commission points
out the issue of how components will be "weighted" will not be addressed in
this phase of compliance history rulemaking; rather, "weighting" will be addressed
in the second phase of rulemaking dealing with classification and use. The
commission believes that it is appropriate to reflect the fact that a person
has notified the agency of its intent to perform such an audit, because this
can be a useful tool for members of the regulated community to determine if
their practices conform to all applicable regulations. However, the commission
points out that it does not agree that the "immunity" provided for in the
Texas Audit Act is "absolute." The Texas Audit Act specifically states in §10(a)
that, "
Except as provided in this section
,
a person who makes a voluntary disclosure of a violation of an environmental
or health and safety law is immune from an administrative, civil, or criminal
penalty for the violation disclosed." (Emphasis added.) The section then goes
on to list numerous exceptions. The Texas Audit Act also defines "penalty"
in §3(a)(5) as "an administrative, civil, or criminal sanction imposed
by the state to punish a person for a violation of a statute or rule. The
term does not include a technical or remedial provision ordered by a regulatory
authority." No changes have been made in response to this comment.
TMRA and Brown McCarroll commented regarding proposed §60.1(b)(8),
(adopted as §60.1(c)(8)). TMRA stated that it "is encouraged that TNRCC
has recognized that the performance of environmental audits should be noted
among the positive components of an entity's compliance history. TMRA notes
that the proposed rule is not clear on whether TNRCC will not include among
the negative components of an entity's compliance history any NOVs, settlement
agreements/orders resulting form voluntarily-disclosed violations under the
Texas Environmental, Health, and Safety Audit Privilege Act (Texas Audit Act)
or the EPA policy entitled 'Incentives for Self-Policing: Discovery, Disclosure,
Correction and Prevision of Violations' (EPA Audit Policy)." Similarly, Brown
McCarroll stated that it "agrees that the TNRCC should consider audits conducted
under the Audit Privilege Act as a positive component of compliance history.
Further, we understand that it is TNRCC's position that any disclosures of
violation pursuant to an audit under the Audit Privilege Act would not be
considered a component of compliance history. We recommend that TNRCC provide
guidance in the preamble to adoption of these rules that confirms this position."
TMRA continued, "The obvious intent behind the Texas Audit Act and the EPA
Audit Policy is to encourage environmental audits and voluntary disclosure
of violations discovered during those audits. If the settlement agreements/orders
that result from voluntarily-disclosed violations are not expressly excluded
from the definition of compliance history, the goals of the Texas Audit Act
and the EPA audit Policy will be greatly compromised. Entities will think
twice about conducting audits and disclosing violations if disclosure will
have a negative impact on their compliance history. This will be especially
true now that an entity's compliance history will be significantly elevated
in importance, from the standpoint of an entity's ranking, eligibility for
innovative programs, and impact on future permit or compliance hearings."
TMRA continued, stating, "Section 10(i) of the Texas Audit Act provides that
'a violation that has been voluntarily disclosed and to which immunity applies
must be identified in a compliance history report as being voluntarily disclosed.'
Given the legislative intent of the Texas Audit Act, TMRA submits that this
section should be read to mean that, if a voluntarily-disclosed violation
is to be considered at all in an evaluation of an entity's compliance history,
the violation should be viewed in a positive light given that it was voluntarily
disclosed. In addition, Section 11 of the Texas Audit Act states that a 'regulatory
agency may not adopt a rule or impose a condition that circumvents the purpose
of this Act.' The purpose of the Texas Audit Act is 'to encourage voluntary
compliance with environmental and occupational health and safety laws.' TMRA
therefore believes that the Audit Act itself precludes TNRCC from negatively
weighting voluntarily disclosed violations or the settlement agreements/orders
that result from such disclosures." TMRA added that it was "encouraged by
statements made on this issue by TNRCC during the October 30, 2001 Stakeholder's
Meeting on the phase 2 Compliance History Rule. Specifically, Ann McGinley,
director, Enforcement Division, Office of Compliance and Enforcement, made
it clear that TNRCC does not intend to have violations voluntarily disclosed
under the Texas Audit Act count against an entity in the compliance history
evaluation process. TMRA trusts that either the final phase 1 or phase 2 rule
will make the intent clear with explicit language in the regulations."
The commission appreciates the positive comments in support of the rule.
The commission acknowledges that the Texas Audit Act, §5, grants a limited
evidentiary privilege for audit reports developed according to the statute.
The Texas Audit Act also provides for immunity from administrative and civil
penalties relating to certain self-disclosed violations. Nothing in the proposed
rule is intended to alter or limit any privilege or immunity provided in the
Texas Audit Act. However, Texas Audit Act, §10(i) states, "A violation
that has been voluntarily disclosed and to which immunity applies must be
identified in a compliance history report as being voluntarily disclosed."
Therefore, violations voluntarily disclosed pursuant to an audit performed
under the Texas Audit Act must be considered as part of an entity's compliance
history. However, the commission points out the issue of how components will
be "weighted" will not be addressed in this phase of compliance history rulemaking;
rather, "weighting" will be addressed in the second phase of rulemaking dealing
with classification and use. The commission believes that it is appropriate
to reflect the fact that a person has notified the agency of its intent to
perform such an audit, as this can be a useful tool for members of the regulated
community to determine if their practices conform to all applicable regulations.
The commission has not proposed to include dates or disclosures made under
the EPA policy entitled "Incentives for Self-Policing: Discovery, Disclosure,
Correction and Prevision of Violations." No other changes have been made in
response to this comment.
Vinson & Elkins commented regarding proposed §60.1(b)(8), (adopted
as §60.1(c)(8)), recommending that the proposed language be modified
to read, "the dates of any letters notifying the executive director of an
intended audit conducted and any violations disclosed under the Texas Environmental,
Health, and Safety Audit Privilege Act, 74th Legislature, 1995." Vinson &
Elkins noted "that violations disclosed under the Texas Environmental, Health,
and Safety Audit Privilege Act are not addressed in the proposed rule. It
is consistent with the legislative intent of HB 2912 that these self-disclosed
violations be a positive component of compliance history. Furthermore, self-disclosure
and correction should be encouraged by the TNRCC both generally and specifically
in the compliance history rules. As stated above, we recognize that this phase
is not intended to 'score' the components and we anticipate commenting further
on the weight given to self-disclosed violations in Phase 2."
The commission agrees with this comment in part. Violations disclosed under
the Texas Audit Act are included under §60.1(c)(7). However, as required
by the Texas Audit Act, these violations will be noted as voluntarily disclosed.
Finally, as stated by the commenter, how components will be "weighted" will
not be addressed in this phase of compliance history rulemaking; rather, "weighting"
will be addressed in the second phase of rulemaking dealing with classification
and use.
ATINGP commented regarding proposed §60.1(b)(8), (adopted as §60.1(c)(8)),
stating, "Dates of letters notifying the agency of such an audit should not
be a part of compliance history as it may connote the existence of a compliance
problem where none exists."
The commission disagrees with this comment. As stated in the proposal preamble,
the intent of including the date of letters notifying the agency of such an
audit is to provide a "positive," as this can be a useful tool for members
of the regulated community to determine if their practices conform to all
applicable regulations. No change has been made in response to this comment.
Cantey & Hanger commented regarding proposed §60.1(b)(8), (adopted
as §60.1(c)(8)). Cantey & Hanger commented, "As the Proposed Rule
is written now, entities which have identified a violation could be penalized
for discoveries made through the audit. The TNRCC suggested at stakeholders'
meetings that a regulated entity would achieve 'good' points for performing
an audit, but in the Proposed Rule the only mention of an audit conducted
under Texas Environmental, Health & Safety Privilege Act is that the date
of any notification letter would be a component. The rule should clarify that
any discovery of a violation by an entity conducting an audit pursuant to
the Act will not be a negative component in a regulated entity's compliance
history. In other words, only violations the TNRCC discovers should have potential
to negatively impact compliance history."
The commission agrees with the comment in part. The commission acknowledges
that the Texas Audit Act, §5, grants a limited evidentiary privilege
for audit reports developed according to the statute. The Texas Audit Act
also provides for immunity from administrative and civil penalties relating
to certain self-disclosed violations. Nothing in the proposed rule is intended
to alter or limit any privilege or immunity provided in the Texas Audit Act.
However, Texas Audit Act, §10(i) states, "A violation that has been voluntarily
disclosed and to which immunity applies must be identified in a compliance
history report as being voluntarily disclosed." Therefore, violations voluntarily
disclosed pursuant to an audit performed under the Texas Audit Act must be
considered as part of an entity's compliance history and are included in adopted §60.1(c)(7)
relating to the inclusion of NOVs in a person's compliance history. Furthermore,
the commission points out the issue of how components will be "weighted" will
not be addressed in this phase of compliance history rulemaking; rather, "weighting"
will be addressed in the second phase of rulemaking dealing with classification
and use. The commission believes that it is appropriate to reflect the fact
that a person has notified the agency of its intent to perform such an audit,
as this can be a useful tool for members of the regulated community to determine
if their practices conform to all applicable regulations.
However, the commission disagrees with the comment that only violations
discovered by the agency should have the potential to negatively impact an
entity's compliance history. The agency is not limited to considering only
those violations it discovers. For example, HB 2912 added TWC, §7.0025,
which specifies that the commission may initiate enforcement using information
provided by a private individual. In addition, regulated entities are required
to self-report certain violations to the agency. Therefore, it would be inappropriate
to limit the types of violation which might negatively impact an entity's
compliance history to those which were discovered by the agency. No changes
have been made in response to this comment.
BP commented regarding proposed §60.1(b)(8), (adopted as §60.1(c)(8)).
BP commented, "TNRCC lists the 'date of letters' notifying the executive director
of an audit as a component of compliance history in §60.1(b)(8). TNRCC
should clarify why the 'date' is critical. In general, BP believes that an
audit should be viewed as a positive component of the compliance history as
it demonstrates a company's proactive efforts towards compliance. Certainly,
if this were a negative any disclosures submitted prior to February 1, 2002
should not be used against the company in this rulemaking."
The commission responds that, as stated in the proposal preamble, the intent
of including an intended audit as a compliance history component is because
voluntary compliance audits can be a useful tool for members of the regulated
community to determine if their practices conform to all applicable regulations.
The reason for including the date of the notice of intent letter was because
it provided a way of showing that a person had submitted such a letter of
intent. The letter of intent is, by its nature, "before the fact" and the
commission has determined that a notice of intent letter is the most practical
means of noting when an environmental audit is conducted. This is based on
the fact that a person is not required to self-disclose any violations discovered
during such an audit, and therefore to look for something other than the notice
of intent could keep those who choose not to self-disclose from obtaining
the "positive" component associated with an environmental audit.
TIP commented regarding proposed §60.1(b)(8), (adopted as §60.1(c)(8)),
stating, "In addition to clarifying that the existence of environmental audits
is a positive component of an entity's compliance history, the language should
be changed to ensure that an increasing number of audits in a five (5) year
period results in a beneficial impact on an entity's compliance history. A
'yes/no' format that only asks whether an entity has performed any audits
in the last five (5) years, fails to award entities that conduct multiple
environmental audits and discourages companies from conducting more than one
audit per five {5} year period." Additionally, in general, BP endorsed the
comments submitted by TIP.
The commission disagrees with these comments. First, the commission responds
that the proposal preamble, as well as this adoption preamble, do make it
clear that this component of compliance history is intended to be a "positive"
component. With regard to the issue of multiple environmental audits being
be counted during the five-year compliance period, the commission responds
that how the components in this phase of the compliance history rulemaking
will be used will be addressed through the second phase of compliance history
rulemaking regarding the classification and use of compliance history, and
is therefore outside the scope of this rulemaking. However, the commission
disagrees that, as the commenter suggests, the "failure to award entities
that conduct multiple environmental audits" would "discourage companies from
conducting more than one audit per five-year compliance period." The sole
rationale for an entity performing an environmental audit should not be for
"positives" on its compliance history record. Rather, the motivation should
be that this can be a useful tool for members of the regulated community to
determine if their practices conform to all applicable regulations. The commission
reiterates that it is not intending to imply that multiple environmental audits
would
not
be counted; as stated earlier, this
aspect of the compliance history rulemaking is simply not addressed during
the current phase. Rather, the commission is simply disagreeing with the commenter's
assertion. No changes have been made in response to these comments.
§60.1(c)(9)
Huntsman commented regarding proposed §60.1(b)(9), (adopted as §60.1(c)(9)).
Huntsman commented that, "The proposed rule does not provide a positive credit
for environmental management systems." Huntsman stated, "Proposed rule §60.1(b)(9)
purports to include environmental management systems (EMS) in a company's
compliance history. However, proposed 30 TAC §90.2(e)(f) expressly provides
that companies that have been adjudicated liable for an environmental violation
(whether civil or criminal) are not entitled to 'regulatory incentives' for
a period of three years following the 'date the judgment was final.' Regulatory
incentives include use of an EMS 'in a person's compliance history and compliance
summaries.' 30 TAC §90.34(5). This conflict must be reconciled because
with regard to compliance history concerns, EMS are one of the most effective
means for a company to rehabilitate itself. Failure to recognize the rehabilitative
value of an EMS in the compliance history process would be contrary to the
public interest. It would discourage the implementation of EMS for three years--exactly
what the TNRCC would not want to happen."
The commission responds that the proposed rule only defines what will be
included in a compliance history. The inclusion of an EMS as a positive aspect
of compliance history will be addressed in subsequent rulemaking. With regard
to the apparent conflict between the proposed Chapter 60 and Chapter 90 regarding
EMS, the commission will clarify the intent of Chapter 90 versus Chapter 60
implementation language goals. Specifically, Chapter 90 only governs the commission's
BP commented regarding proposed §60.1(b)(9), (adopted as §60.1(c)(9)).
BP stated, "Concerning the 'type' of environmental management system (EMS),
BP continues to believe that plants that operate under an ISO 14001 certified
environmental management system set the standard for an acceptable EMS program.
Such programs should be viewed very positively in the compliance history.
Consistent with our comments on the TNRCC's proposed EMS rulemaking, ISO 14001
certified facilities should be ranked
at least
average in compliance history."
The commission notes that EMS are a very positive aspect of compliance
history and that properly implemented ISO 14001 certified programs provide
an excellent standard under which EMS can be developed. How an EMS will be
considered as a positive component of compliance history will be determined
in subsequent rulemaking on compliance history use. The commission disagrees
that ISO 14001 certified facilities should be ranked at least average in compliance
history since the existence of an EMS in and of itself cannot guarantee an
average ranking. If the regulated entity has an EMS, but still has significant
negative compliance history data, then the existence of the EMS has not corrected
those issues and it would not be appropriate to give that entity an average
ranking solely because an EMS was in place. If an entity has an effective
EMS, the regulated entity should be reducing negative aspects of compliance
history over time and will, by nature of implementing the EMS, end up as an
average or higher ranking. It is not appropriate to eliminate all other aspects
of compliance history in determining compliance ranking solely because of
the existence of an EMS. The commission makes no change to the rule in response
to this comment.
TPCA and 7-Eleven commented regarding proposed §60.1(b)(9), (adopted
as §60.1(c)(9)). TPCA stated that proposed §60.1(b)(9) "includes
in compliance history the 'type' of environmental management system utilized
by the subject person. This section should be revised to provide for the inclusion
in compliance history of all relevant information concerning environmental
management systems utilized by the subject person. We would recommend that
the section be revised to include in compliance history 'information indicating
the degree to which environmental management systems are utilized by the person
to achieve compliance.'"
The commission responds that the detail of information regarding the type
of EMS included in the compliance history information for the regulated entity
will be included in subsequent actions by the commission regarding compliance
history use. The type of EMS developed by an entity should indicate the degree
to which the EMS are used for compliance purposes. Therefore, the commission
makes no change in response to this comment.
ICE and AECT commented regarding proposed §60.1(b)(9), (adopted as §60.1(c)(9)),
stating that it is concerned about the use of the term "type" in the proposed
language "because environmental management systems may not be of a specified
and branded 'type,' and yet still be very effective at ensuring compliance
with environmental regulations." AECT also suggested that the words "type
of" be deleted from the proposed language. TCC made a similar comment regarding
proposed §60.1(b)(9). Specifically, TCC suggested removal of the words
"type of" in the proposed language "because the rule does not clarify the
types of environmental management systems." Additionally, in general, BP endorsed
the comments submitted by TCC.
The commission responds that in order to measure one EMS against another,
since not all EMS are equal in scope or effectiveness, the commission will
need to consider against what standards the EMS are developed. All EMS are
developed and reviewed for its effectiveness by some standard, whether formally
adopted or internally developed. Therefore, the commission notes that every
EMS must be able to be categorized in order to properly assess its impact
as a positive component of compliance history. The commission used the language
"type" to indicate that all EMS may not be considered equally as a positive
aspect of compliance history. This will be further developed under subsequent
actions by the commission governing compliance history use. No changes have
been made in response to this comment.
Brown McCarroll commented regarding proposed §60.1(b)(9), (adopted
as §60.1(c)(9)). Brown McCarroll stated that it "agrees with the TNRCC
that having an environmental management system should be a positive component
of compliance history. Nevertheless, we do not believe the absence of an environmental
management system should be considered a negative component of compliance
history. The TNRCC Sunset law, H.B. 2912, specified that the Commission would
adopt a comprehensive program to provide regulatory incentives for the use
of environmental management systems.
See
H.B.
2912, Section 1.12, adding § 5.131 to the Texas Water Code. It did not
authorize the TNRCC to consider the lack of an environmental management system
in a punitive manner. Consequently, we recommend that the TNRCC provide guidance
to clarify that if a company has an environmental management system, it would
be considered a positive component of its compliance history, but that lack
of such a system would have a neutral effect on the company's compliance history."
The commission responds that the lack of an EMS would have a neutral effect
on the company's compliance history. The proposed rule language does not in
any way indicate that the lack of an EMS would be considered in a punitive
matter. The use of an EMS as a positive aspect of compliance history will
be addressed in subsequent rulemaking on compliance history use. Therefore,
the commission makes no change in response to this comment.
TIP commented regarding proposed §60.1(b)(9), (adopted as §60.1(c)(9)).
TIP commented that proposed §60.1(b)(9) "provides that the 'type' of
environmental management system, if any, used by an entity will be included
as a component of compliance history. In addition to clarifying that maintenance
of an EMS is a positive component of an entity's compliance history, the agency
should clarify the significance of its use of the word 'type' when referring
to EMS. For instance, does 'type' imply that certain EMS's will not be considered
a positive component of compliance history? Moreover, will only an EMS that
is approved pursuant to Chapter 90 be considered a positive component of compliance
history? The currently proposed EMS rules do not limit companies to certain
types of EMS, nor should they." Additionally, in general, BP endorsed the
comments submitted by TIP.
The commission responds that clarifying that the maintenance of an EMS
is a positive component of compliance history in the proposed rule language
does not add any indication of a greater or lesser EMS because all EMS must
be maintained in order to be effective. Any EMS considered a positive aspect
of compliance history under this rulemaking would have to be maintained to
be effective. Therefore, the commission will not add additional language regarding
the maintenance of an EMS to the proposed language. In response to the use
of the word "type," the commission clarifies that not all EMS are created
equal in their scope, effectiveness, and the standards by which they are developed
under. Therefore, the commission will consider those elements in determining
how much weight will be awarded to the use of an EMS as a positive aspect
of compliance history. It is not the intention of the commission to only consider
those EMS developed under Chapter 90 because the statute language in HB 2997
does not limit inclusion of EMS in compliance history to only EMS developed
under HB 2997 standards. The "types" of EMS considered as positive components
for compliance history will be addressed under subsequent rulemaking regarding
compliance history use. Therefore, the commission makes no change in response
to these comments.
§60.1(c)(11)
TIP, ATINGP, Brown McCarroll, and Vinson & Elkins commented regarding
proposed §60.1(b)(11), (adopted as §60.1(c)(11)). TIP stated that
proposed §60.1(b)(11) "provides that participation in voluntary pollution
reduction programs will be considered a positive aspect of compliance history.
However, the agency has not identified any programs that would meet this requirement.
In addition to clarifying that this requirement is a positive component of
an entity's compliance history, the TNRCC should clarify in the preamble to
the final rule which current programs it intends this requirement to apply
to, while leaving open the possibility that new programs may be included in
the future." Additionally, in general, BP endorsed the comments submitted
by TIP. ATINGP stated, "This section provides that the decision to participate
in a voluntary pollution reduction program should be a part of an entity's
compliance history. This section should be further clarified so that it is
clear that participation in any voluntary pollution reduction program, whether
it is public or private, is part of the compliance history." Further, ATINGP
recommended "that this section be expanded or a new section added to reflect
that an award from the TNRCC's Environmental Excellence Award Program shall
be a part of the compliance history." Brown McCarroll stated, "Participation
in a voluntary pollution reduction program would represent positive, beneficial
actions with respect to the environment. Likewise, Brown McCarrol believes
that remediations pursuant to the Voluntary Cleanup Program also represent
beneficial environmental conduct, and should be included as a component of
compliance history." Brown McCarroll recommended that the proposed language
be revised to read, "(11) Participation in a voluntary pollution reduction
program or the Voluntary Cleanup Program." Vinson & Elkins stated, "Unlike
the components listed in § 60.1(b)(1) - (7), which are so comprehensive
as to almost guarantee double counting, the components in §60.1(b)(8)
- (12), offer only limited opportunities to demonstrate compliance with environmental
laws and regulations. It is not clear whether the voluntary pollution reduction
programs for which an entity could received credit under §60.1(b)(11)
are only those sponsored or implemented by TNRCC, such as Clean Texas (i.e.
Responsible Care), or if internal corporate programs or programs offered by
EPA, other states, or trade organizations, would be credited as well."
The commission responds that the language in the proposed rule does not
limit what types of programs will qualify for credit to only those programs
sponsored by the commission. Specifically, what types of voluntary pollution
reduction programs will qualify and how they will be used as positive aspects
of compliance history will be the subject of subsequent rulemaking regarding
compliance history use. Therefore, the commission makes no change in response
to these comments.
§60.1(c)(12)
TIP commented regarding proposed §60.1(b)(12), (adopted as §60.1(c)(12)).
With regard to this proposed paragraph, TIP stated, "In addition to clarifying
that this requirement is a positive component of an entity's compliance history,
the TNRCC should clarify whether the beneficial impact of this component ends
when the 'future' requirement takes effect. The agency should further clarify
the effective period of this component in cases where an entity complies with
a rule that will take effect in less than five (5) years (i.e., less than
the compliance history evaluation period)." Additionally, in general, BP endorsed
the comments submitted by TIP.
The commission responds that, as reflected in the proposal preamble, this
is intended to be a "positive" component of compliance history. The preamble
reflects that a description of a person's early compliance with or offer of
a product that meets future state or federal government environmental requirements
is considered an appropriate positive component because accelerating the implementation
of new requirements that are intended to benefit the environment is a choice
that a person may make. Furthermore, this voluntary early compliance is also
a reflection of a person's commitment to environmental excellence. The intent
is not that once the "future" requirement takes effect that the beneficial
impact in a person's compliance history ends; rather, the date upon which
the applicable early compliance is achieved will be included as a "positive"
for compliance histories compiled for the next five years. The same thing
applies with regard to a situation where an entity complies with a rule that
will take effect in less than five years. Although the use of compliance histories
is outside the scope of this rulemaking and will be addressed in the next
phase of compliance history rulemaking, it is not anticipated that compliance
histories will remain "static" during a five-year period. No changes have
been made in response to this comment.
§60.1(c)(8) - (12), collectively
Representatives
Burnam, Maxey, and McClendon commented regarding proposed §60.1(b)(8)
- (12), (adopted as §60.1(c)(8) - (12)). Representatives Burnam, Maxey,
and McClendon stated that the commission is proposing to include a number
of irrelevant items to compliance history, including things such as considering
whether a company has filed a "notice of intent audit," the consideration
of whether a company participates in a "voluntary pollution reduction program,"
and whether a company makes a product that will comply with future environmental
regulations. They added that HB 2912 does not provide for the consideration
of these factors in compliance history and does not give TNRCC the expressed
direction to include them. Representatives Burnam, Maxey, and McClendon further
added that §60.1(b)(8) - (12) "must be removed." Similarly, GHASP, ACT,
and 505 individuals commented regarding proposed §60.1(b)(8) - (12),
(adopted as §60.1(c)(8) - (12)). GHASP and the 505 individuals stated,
"TNRCC is proposing to include a whole range of extra factors in the compliance
history, like whether the company has ever filed a notice of intent to do
an audit, or whether it is enrolled in some sort of voluntary pollution reduction
program. These items are irrelevant to complying with environmental regulations
and should be deleted from the rule altogether. TNRCC should stick to the
list the Legislature created, and stop adding meaningless fluff to help polluters
pretty-up a dirty record." Similarly, ACT stated that the "proposed rule would
allow consideration of various factors that, while allowing a company to represent
its good intentions for future performance, are
meaningless
for the purpose of reviewing its actual compliance performance
history." One individual commented that the inclusion of these items would
weaken existing practice. ACT further commented that these proposed paragraphs
"include various factors that are completely irrelevant to compliance performance.
Including these factors is contrary to the clear directives of HB 2912 regarding
which factors must be part of compliance history. In fact, Section 5.753(b)
as added by HB 2912, provides that the compliance history 'must' include certain
factors; it does not say 'at a minimum; or 'include, but not limited to' certain
factors and thus the agency does not have discretion to include the factors
specified in {proposed} 60.1(b)(8), (10), (11) or (12)." ACT continued, "Without
waiving the foregoing, even if §5.753(b) were interpreted as giving TNRCC
discretion to include additional factors, the times in the proposed sections
specified above are
irrelevant
to compliance
performance and there can be no justification for their inclusion." ACT stated
that none of the components listed in the referenced paragraphs "are relevant
to compliance performance. In fact, it is obvious from the preamble that these
factors relate not to compliance performance, but rather to some general notion
of '
commitment to environmental excellence
.'
While indications of such a commitment are surely important to determining
a company's
intent
or approach, they are not
in any way indicative of actual compliance
performance
. As such, there can be no reasoned justification for including them
as components of compliance history. TNRCC's lack of rationale, objective
and non-arbitrary approach to consideration of factors outside the ones specified
in §5.753(b) is further evidence of the agency's outright rejection of
more relevant factors, such as complaint history and evidence that a facility
has had to implement its emergency and contingency plan. Clearly, complaints
The commission disagrees with these comments. The statute does not limit
the factors that can be considered. Specifically, TWC, §5.753(b) states,
"The components of compliance history
must
include..." (Emphasis added.) It does not say "must only include," nor does
it include any other such limiting language. Furthermore, in HB 2912, §1.12,
which creates TWC, §5.131, Environmental Management Systems, it states
in §5.131(b)(3)(A) that, "The commission by rule shall adopt a comprehensive
program that provides regulatory incentives to encourage the use of environmental
management systems by regulated entities, state agencies, local governments,
and other entities as determined by the commission. The incentives may include
... (3) to the extent consistent with federal requirements: (A) inclusion
of information regarding an entity's use of an environmental management system
in the entity's compliance history and compliance summaries." Environmental
management systems are one of the "positive" components include in adopted §60.1(c)(8)
- (12). House Bill 2997 amends TWC, §26.028, to require inclusion of
information regarding an EMS in an applicant's compliance history and compliance
summaries for which an authorization is sought. The commission has determined
that it is appropriate, as well as allowable, to include components other
than those specified in the statute, in order to more fairly and fully evaluate
a person's commitment to environmental excellence. These items are relevant
in reviewing a person's compliance history as many volunteer programs demonstrate
significant environmental impacts in the reduction of pollution and additional
protection of human health and the environment; therefore, no change has been
made in response to these comments. Additionally, the commission does not
agree that the inclusion of the "positive" items would weaken existing practice.
Rather, the commission believes that including these items will present a
more complete picture of a person's environmental record, providing a better
position from which to evaluate a person's commitment to environmental excellence.
No change has been made in response to these comments.
One individual commented regarding proposed §60.1(b)(8) - (12), (adopted
as §60.1(c)(8) - (12)), stating that "meaningless cosmetics do not clean
up our air and water; compliance with legislative directions in this case
does."
The commission does not agree that the components proposed in §60.1(b)(8)
- (12) constitute "meaningless cosmetics" and furthermore, has determined
that these proposed components can lead to the clean up of Texas' air and
water by their nature. The commission believes that including these items
will present a more accurate picture of a person's environmental record, providing
a better position from which to evaluate a person's commitment to environmental
excellence. House Bill 2997 amends TWC, §26.028, to require inclusion
of information regarding an EMS in an applicant's compliance history and compliance
summaries for which an authorization is sought. Additionally, the commission
has received legislative direction elsewhere in HB 2912, Article 4, as it
adds new TWC, §5.755(b), regarding strategically directed regulatory
structure. Although not included as a mandatory factor of compliance history
under §5.753(b), this section requires that voluntary measures undertaken
by a person to improve environmental quality must be taken into consideration
in offering incentives under a strategically directed regulatory structure.
No change has been made in response to this comment.
Two individuals commented regarding proposed §60.1(b)(8) - (12), (adopted
as §60.1(c)(8) - (12)). One of the individuals specifically listed items
8 - 12, and commented that if a person is able to get points for intending
to conduct an audit, then the results of that audit should be included in
the compliance history as well. One of the individuals commented that "industries
should be evaluated by the results of their actions, not their intentions,"
and went on to say that the "extraneous details only serve to cloud the essential
facts."
The commission responds that adopted §60.1(c)(7) includes any violations
disclosed under an environmental audit. However, the commission points out
that the issue of how components will be "weighted" will not be addressed
in this phase of compliance history rulemaking; rather, "weighting" will be
addressed in the second phase of rulemaking dealing with classification and
use. The commission believes that it is appropriate to reflect the fact that
a person has notified the agency of its intent to perform such an audit, as
this can be a useful tool for members of the regulated community to determine
if their practices conform to all applicable regulations. The commission does
not agree that the components proposed in §60.1(b)(8) - (12) constitute
"extraneous details" that "only serve to cloud the essential facts." The commission
believes that including these items will present a more accurate picture of
a person's environmental record, providing a better position from which to
evaluate a person's commitment to environmental excellence. House Bill 2997
amends TWC, §26.028, to require inclusion of information regarding an
EMS in an applicant's compliance history and compliance summaries for which
an authorization is sought. Additionally, the commission has received legislative
direction elsewhere in HB 2912, Article 4, as it adds new TWC, §5.755(b),
regarding strategically directed regulatory structure. Although not included
as a mandatory factor of compliance history under §5.753(b), this section
requires that voluntary measures undertaken by a person to improve environmental
quality must be taken into consideration in offering incentives under a strategically
directed regulatory structure. No changes have been made in response to this
comment.
TCONR commented regarding proposed §60.1(b)(8) - (12), (adopted as §60.1(c)(8)
- (12)). TCONR commented that the proposed provisions in §60.1(b)(8)
- (12) are "not only irrelevant to an entity's compliance history but also
are neither required nor contemplated by" TWC, §5.753(b). "This list
contains items that are only vaguely defined or are undefined and would allow
consideration of meaningless items to be included in a compliance history...."
TCONR commented that while it may be true, as stated in the proposal preamble,
that voluntary compliance audits and other voluntary programs can be a useful
tool for members of the regulated community, this "in no way justifies or
explains why dates of audit notice letters or regulatees' representations
about voluntary compliance efforts are relevant components of compliance history."
TCONR further stated, "For example, the agency would include regulatee 'descriptions'
about compliance with potential future regulations with no explanation of
how it views these 'descriptions' as
history
.
Moreover... there are not provisions in the proposed rule for the TNRCC to
verify the accuracy or 'merit' of these representations by regulated entities.
The inclusion of these exculpatory or ameliorative items in these subsections
of the rule strongly signals an agency invitation for excuses that would not
carry weight under the express language of the statute. These provisions undermine
the plain language and intent of the statute and we request they be stricken
from the final rule."
The commission disagrees with this comment. The statute does not limit
the factors that can be considered. Specifically, TWC, §5.753(b) states,
"The components of compliance history
must
include..." (emphasis added). It does not say "must only include," nor does
it include any other such limiting language. House Bill 2997 amends TWC, §26.028,
to require inclusion of information regarding an EMS in an applicant's compliance
history and compliance summaries for which an authorization is sought. Environmental
management systems are one of the "positive" components include in adopted §60.1(c)(8)
- (12). The commission has determined that it is appropriate, as well as allowable,
to include components other than those specified in the statute, in order
to more fairly and fully evaluate a person's commitment to environmental excellence.
These items are not irrelevant in reviewing a person's compliance history;
rather, the commission believes that including these items will present a
more complete picture of a person's environmental record, providing a better
position from which to evaluate a person's commitment to environmental excellence.
Additionally, how the components of compliance history will be used and how
voluntary pollution prevention program will be evaluated is outside the scope
of this rulemaking and will be addressed in the next phase of rulemaking concerning
the classification and use of compliance history.
The commission would like to point out that further in the statute, specifically
TWC, §5.755, the commission is directed to "provide incentives for enhanced
environmental performance," and to also offer incentives for entities that
have taken "any voluntary measures undertaken by the person to improve environmental
quality." These positive components will provide incentives for entities who
are in the lowest classification to improve their performance. The state's
natural environment, as well as the citizens of the state, will benefit from
these extra steps that entities do not necessarily need to perform, but may
elect to do, to improve their environmental performance. The commission disagrees
that these components "contain(s) items that are only vaguely defined or are
undefined and would allow consideration of meaningless items to be included
in a compliance history." No changes have been made in response to this comment.
TIP commented regarding proposed §60.1(b)(8) - (12), (adopted as §60.1(c)(8)
- (12)). TIP expressed the belief that proposed §60.1(b)(6), "where an
investigation results in no significant findings," and §60.1(b)(8) -
(12), "in any situation, represent 'positive components' of compliance history.
However, the TNRCC has made no effort, either in the preamble or the proposed
rule itself, to differentiate between positive and negative aspects of compliance
history. As a result, the agency should clarify in the preamble to the final
rule that these proposed rule sections represent positive compliance history
components." Additionally, in general, BP endorsed the comments submitted
by TIP.
The commission disagrees that it did not distinguish in the proposal preamble
that the components in adopted §60.1(c)(8) - (12) are "positive" components.
Specifically, the proposal preamble states, "The commission suggests that
there are other components of compliance history that it should consider to
fully evaluate a person's commitment to environmental excellence." This, taken
in conjunction with the additional discussion in the proposal preamble regarding
the specified components reflects the commission's intent to consider these
as positives. However, the commission also responds that the weighting of
components contemplated by this comment will not be addressed until the next
phase of compliance history rulemaking concerning classification and use.
NTMWD, TPWA, and TMRA commented regarding proposed §60.1(b)(8) - (12),
(adopted as §60.1(c)(8) - (12)). NTMWD stated that it "supports the Commission's
inclusion of positive components of compliance history in an entity's compliance
record and believes that the positive comments identified in the proposed
rule are appropriate. Such positive components are a necessary part of the
rules based on the Legislature's mandate to 'develop a strategically directed
regulatory structure to provide incentives for enhanced environmental performance'"
in TWC, §5.755(a). TPWA provided a very similar comment, adding that
it "believes that the inclusion of positive components is the appropriate
way to acknowledge actions that exceed the requirements and therein encourage
environmental excellence." TMRA stated that it "strongly supports the use
of positive components of compliance history in assessing the over-all compliance
of an entity and commends TNRCC for including the items set out."
The commission appreciates the positive comments in response to the rule.
TxSWANA commented regarding proposed §60.1(b)(8) - (12), (adopted
as §60.1(c)(8) - (12)), stating that it "supports the inclusion of positive
components of compliance history in an entity's compliance record. Section
5.755(a) of the Sunset Bill requires the 'commission by rule {to} develop
a strategically directed regulatory structure to provide incentives for enhanced
environmental performance.' Section 5.755(b)(1) states that these incentives
should be offered based on 'a person's compliance history classification...'
TxSWANA believes that the inclusion of positive comments in a person's compliance
history is necessary to implement these legislative mandates. In fact, TxSWANA
believes that listing positive components as part of an entity's compliance
record, factoring the positive components into the entity's over-all ranking,
and providing incentives for positive components are all necessary parts of
the two-phased rule. Absent incentives for good compliance and voluntary positive
undertakings, this rule does not encourage entities to do any more than is
necessary to avoid being ranked as a poor performer. If positive components
are factored in and there are incentives for having a good compliance history,
however, then entities would be encouraged to reach above mere 'average' and
aim to be a high performer. TxSWANA, therefore, strongly support the TNRCC's
consideration of positive components of compliance history." TxSWANA further
stated that it "believes that the positive components identified in the draft
rule are all appropriate."
The commission appreciates the positive comments in response to the rule.
Vinson & Elkins commented regarding proposed §60.1(b)(8) - (12),
(adopted as §60.1(c)(8) - (12)), stating that it applauds the commission's
"recognition of a person's commitment towards environmental excellence in
the components of compliance history. Credit for undertaking environmental
assessments, implementation of environmental management systems, participation
in voluntary pollution reduction programs, and for early compliance with future
environmental requirements are all activities which demonstrate an entity's
desire to operate efficiently within an environmentally beneficial framework."
The commission appreciates the positive comments in response to the rule.
§60.1(c)(13)
BP commented regarding proposed §60.1(b)(13), (adopted as §60.1(c)(13)).
BP commented, "Certain other components, such as item (13) (the name and telephone
number) ... do not 'fit' with the component listing. These items are general
information useful in the compliance history but are not in and of themselves
contributors. TNRCC should reword accordingly." TCC commented that it believes
this paragraph "should be removed as a component because agency staff names
and telephone numbers do not relate to a regulated entity's compliance history."
The commission disagrees with this comment. The commission has determined
that, while agency contact information is not a component that will have any
effect on a person's compliance history, it is important information to include
in a report. No change has been made in response to this comment.
Suggested additions to §60.1(c)
TxSWANA and TPWA commented regarding proposed §60.1(b), (adopted as §60.1(c)).
The commenters suggested that the fact that the entity participates in innovative
technologies should be a positive component in his compliance record. Providing
incentives for the early use of technology designed to protect the environment
or minimize the consumption of resources is the best way to protect the environment
long-term. TxSWANA and TPWA maintained, "therefore, that participation in
programs designed to promote innovative technologies (i.e. the TNRCC Innovative
Technology Program or the EPA's Project XL) or individual use of innovative
technologies designed to make better use of environmental resources (i.e.
implementation of wet cell technology in landfilling) should count in favor
of an entity in assessing his compliance record." Additionally, TxSWANA and
TPWA both stated that the Clean Cities Program and the Clean Texas Program
are programs sponsored by the TNRCC that seek to encourage environmental excellence.
Participation in these programs is voluntary and requires member cities to
meet certain standards. TxSWANA and TPWA commented, therefore, that the willingness
to participate in these programs shows the commitment to environmental excellence
that the TNRCC seeks to promote through the use of positive compliance history
components and should be added to the rule.
The commission responds that the specific examples cited by TxSWANA and
TPWA would fall under participation in voluntary pollution reduction programs
in the existing rule language. Therefore, the addition of language to the
proposed rule would not increase the types of programs that could be included
as positive components. The degree to which these specific programs will be
considered positive components of compliance history will be addressed in
subsequent rulemaking regarding compliance history use. Therefore, the commission
makes no change in response to these comments.
TxSWANA, TPWA, and NTMWD commented regarding proposed §60.1(b), (adopted
as §60.1(c)). The commenters all similarly stated that they believe that
cities and private entities should be credited for purposefully constructing
a facility larger than is necessary to serve the immediate community's needs
in an effort to make available services to small outlying communities that
could not afford to erect such facilities themselves. The commenters cited
as an example that a medium-sized city might consider the future solid waste
disposal needs of its neighboring small cities and unincorporated areas when
deciding how much land to purchase and how large of a landfill to permit.
In such a situation, the medium-sized city is putting forth its own resources
to accommodate its less resource-intensive neighbors and this serves the regional
interest. NTMWD cited as another example a regional entity's efforts to combine
separate, smaller facilities into a regional facility that can be run more
efficiently and in a more environmentally sound manner. TxSWANA, TPWA, and
NTMWD commented that the TNRCC should allow a credit for such acts of regional
accommodation.
The commission responds that although community planning for future resource
needs benefits the surrounding communities, it does not necessarily guarantee
an increase in compliance, an improvement in the compliance history of the
entity, or achievement of environmental improvement. It would also be very
difficult to assess to what degree the project allows a facility to operate
in a "more environmentally sound manner" and provides "regional accommodation."
For these reasons, to include these components in positive compliance history
is out of scope of this proposed rulemaking. Therefore, the commission makes
no change in response to these comments.
TIP commented regarding proposed §60.1(b), (adopted as §60.1(c)),
stating that the commission "should also consider the addition of other clearly
positive components of compliance history. For example, participation in community
education programs and supplemental environmental projects ("SEPs") should
be added as positive components. The ability of companies to freely submit
positive compliance-related information is critical to maintaining a fair
program." Additionally, in general, BP endorsed the comments submitted by
TIP. ExxonMobil Refining further commented on proposed §60.1(b), recommending
that, in addition to including participation in community education programs
and SEPs, participation in Citizen Advisory Panel (CAP) and the CARE program
should be included as well.
The commission responds that community outreach and education programs
and the degree to which they are implemented varies widely among entities.
It would be extremely difficult for the commission to determine whether a
community outreach program is successful and effective as uniform standards
used by all regulated entities for these types of programs do not exist. In
addition, whether the outreach program results in environmental improvement
is also difficult to determine. Therefore, it is not practical and the resources
do not exist to evaluate every regulated entity's community outreach programs
in order to determine their positive impact on compliance history. The commission
makes no change in response to this comment. Additionally, SEPs are actions
performed as a way of offsetting some portion of a respondent penalty in an
enforcement action. As such, it is not an appropriate positive component of
compliance history, and no change has been made in response to this comment.
The commission further responds that other programs listed could potentially
fall under participation in voluntary pollution reduction programs in the
existing rule language. Therefore, the addition of language to the proposed
rule would not increase the types of programs that could be included as positive
components. The degree to which these specific programs will be considered
positive components of compliance history will be addressed in subsequent
rulemaking regarding compliance history use. Therefore, the commission makes
no change in response to these comments.
BP commented regarding proposed §60.1(b), (adopted as §60.1(c)).
BP suggested that the "TNRCC must balance the positive and negative aspects
of the compliance history by adding additional proactive components to the
listing." BP suggested the inclusion of the following: voluntary reductions
in greenhouse gas emissions; introduction of clean fuels earlier than required;
any additional controls added outside of regulatory requirements; any voluntary
cleanups; any wetlands voluntarily restored; any proactive efforts which benefit
the environment, such as habitat improvements, coastal grass plantings, and
other similar initiatives; proactive programs by a company in other states;
financial contributions provided to the community through corporate funds;
maintenance of green belt areas; recycling efforts; community involvement
via groups like a CAP; company-sponsored, employee volunteer activities; and
financial support for community monitoring or siren alert systems.
The commission responds that many of the specific examples cited by BP
would fall under participation in voluntary pollution reduction programs in
the existing rule language. Therefore, the addition of language to the proposed
rule would not increase the types of programs that could be included as positive
components. The degree to which these specific programs will be considered
positive components of compliance history will be addressed in subsequent
rulemaking regarding compliance history use. Therefore, the commission makes
no change in response to these comments.
7-Eleven and TPCA commented regarding proposed §60.1(b), (adopted
as §60.1(c)), stating that a "new subparagraph (14) should be added to
Section 60.1(b) to explicitly provide the owner and/or operator of subject
sites with an opportunity to review and correct the compliance history compiled
by TNRCC
prior
to any use by TNRCC."
The commission disagrees with this comment. A regulated entity currently
has, and will continue to have, the ability to submit (additional) information
for consideration on behalf of a claim that information included in its compliance
history is inaccurate and/or erroneous. A regulated entity is free, and in
fact encouraged, to provide information for consideration to correct inaccuracies
at any time. However, due to the number of compliance histories that the agency
will be preparing, it is not feasible to send drafts to regulated entities
prior to their use by the agency. No changes have been made in response to
these comments.
EMCC, AECT, and ICE commented regarding proposed §60.1(b), (adopted
as §60.1(c)). EMCC commented that it "would like to preserve some flexibility
for a person to voluntarily submit supplemental information to their compliance
history that would be pertinent. This would avoid limiting the positive information
to that currently identified under {proposed} §60.1(b)(8) - (12)." AECT
and ICE stated that they agree with including components of compliance history
such as those proposed in paragraphs (8) - (12). However, the commenters added
that "there may be some things a person might do that would be beneficial
to the environment and should be encouraged, but that would not fit into any
of the descriptions in proposed §60.1(b)(8) - (12)." Therefore, AECT
and ICE suggested that a new paragraph be added to proposed §60.1(b)
to include "other voluntary programs or efforts by a person that will help
to ensure future compliance with environmental laws, regulations, and permits,
and/or will benefit the environment and/or members of the public."
The commission responds that the proposed rule language does not preclude
a person from voluntarily submitting supplemental information regarding their
compliance history in the public record that would be pertinent. The commission
notes that the mechanism by which this information would be available to the
public may be different if it does not fall under one of the categories listed
in §60.1(c)(8) - (12). For example, if a company chooses to submit an
environmental report for the general public, it would be available upon request
with the company's files resident at the commission, but it may not be able
to be posted on the external website database to be developed for use by the
general public. The commission makes no change in response to this comment.
Huntsman commented regarding proposed §60.1(b), (adopted as §60.1(c)).
Huntsman stated, "The uniform standard should credit companies that provide
the information on which a violation or enforcement action is based." Huntsman
stated that is does not expect the agency to reward it for doing what is required
by law, or to disregard violations on the basis that they were self-reported.
However, Huntsman stated that it believes that positive credit should not
be limited to violations reported under the Texas Audit Act; rather, Huntsman
believes the rule should provide for positive credit whenever an NOV or enforcement
action is based on information provided by the facility. Huntsman further
stated that self-reporting a violation demonstrates commitment to compliance
and good faith, conserves agency resources, and enhances the likelihood of
a meaningful resolution of the problem giving rise to the violation.
The commission disagrees with this comment. Many violations are required
to be self-reported, and the act of not reporting them constitutes another
violation in and of itself. Additionally, the commission responds that in
some circumstances, a regulated entity is afforded "positive credit" in the
assessment of an administrative penalty in an enforcement action when the
regulated entity has reported violations not required to be reported. The
proposal to include notices under the Texas Audit Act is intended to reflect
a proactive approach taken by a regulated entity in determining whether its
practices conform to applicable requirements, as opposed to a reactive response
to a violation which has already occurred. No change has been made in response
to this comment.
Huntsman commented regarding proposed §60.1(b), (adopted as §60.1(c)).
Huntsman commented that, "The uniform standard should provide credit for environmental
projects that go 'beyond compliance.'" Huntsman added, "The proposed rule
should provide positive credit for projects that can be shown to have provided
a result that is 'beyond compliance.' From the standpoint of the community,
these projects provide a benefit that would not otherwise be realized. The
policy consideration that support a positive credit for audits in the proposed
rule support a positive credit for projects that take a facility beyond compliance."
The commission responds that environmental projects that go beyond compliance
would be captured under the existing §60.1(c)(8) - (12) as discussed
in previous comments. The exact weight of these programs as a positive aspect
of compliance history is not the subject of this rulemaking, but will be addressed
in subsequent actions by the commission governing compliance history use.
Therefore, the commission makes no change in response to this comment.
Huntsman commented regarding proposed §60.1(b), (adopted as §60.1(c)).
Huntsman commented, "The uniform standard should provide credit for monitoring
programs that go beyond regulatory requirements." Huntsman stated, "Source
compliance monitoring is the best means a facility and the State has of ensuring
ongoing compliance with permit and regulatory requirements. Likewise, ambient
or fence-line monitoring can provide 'real-time' data, allowing the site to
immediately reduce impacts on the community. Long-term ambient or fence-line
data trends also provide valuable information to the State and company to
assist in strategic planning. Proposed section §60.1(b)(11) allows voluntary
pollution reduction programs to be considered a positive aspect of compliance
history. In this same spirit, the rule should also reward facilities that
implement monitoring programs that go beyond that required by permits or regulations."
The commission disagrees with the comment. Although the commission agrees
that compliance monitoring can be an effective tool in managing emissions,
it is not in and of itself a pollution reduction activity. The commission
has made no change in response to the comment.
Huntsman commented regarding proposed §60.1(b), (adopted as §60.1(c)).
Huntsman stated that, "The uniform standard should reflect a company's cooperation
in a criminal investigation." Huntsman stated that corporate criminal convictions
are among the components that must be included in a compliance history, and
furthermore, corporate criminal convictions are an important part of agency
enforcement. But, Huntsman expressed concern because "corporate liability
is vicarious: a corporation with a firm commitment to environmental compliance
can be indicted for the culpable conduct of its employees." Huntsman stated
that, "The federal Department of Justice has developed guidelines to assist
federal prosecutors when they are considering the presentation of criminal
charges against a corporation. The EPA audit policy contains a similar policy.
The Texas Environmental Enforcement Task Force has dealt with the issue of
when to indict a company for the wrongful conduct of its employees. Common
to all these approaches is the question of whether the corporation has cooperated
in the investigation." Huntsman suggested that corporate cooperation or assistance
in a state or federal investigation into environmental criminal offenses should
be counted as a positive element of compliance history.
The commission does not agree with the comment, except in that TWC, §5.753(b),
does require the inclusion of criminal convictions as a component of compliance
history, and that the agency does pursue criminal convictions in some instances.
However, the commission points out that as proposed, the only components of
a person's compliance history are those components against, pursued by, etc.
the person. In other words, if the permit applicant is a corporation, and
an employee of that corporation has been convicted of an environmental criminal
offense while in the employment of the applicant corporation, the individual's
conviction would not be counted as a component of the applicant's compliance
history. Furthermore, the commission does not agree with the comment that
cooperation or assistance in a state or federal investigation into environmental
criminal offenses should be counted as a positive element of compliance history.
An entity's cooperation with a criminal investigation will be considered by
the investigating and/or prosecuting entities during the course of the criminal
investigation and/or trial. No changes have been made in response to this
comment.
TCONR commented regarding proposed §60.1(b), (adopted as §60.1(c)).
TCONR commented that "information such as dates and nature of inspections
(announced or unannounced) and the number or nature of complaints concerning
a facility is relevant to its compliance history. Self-reported violations--that
is, violations required to be reported by regulated industries--are also relevant
components of compliance history. Self-reported violations by their nature
can be expected to have merit and are similar to notices of violation. We
request that the final rule incorporate these components, rather than the
extenuating matters now included in the proposed rule. Astonishingly, the
agency explains in its preamble that it did not include complaints received
as a component of compliance history because '{t}hese items are not specifically
included in TWC, §5.753 as required components of compliance history...'
It is disingenuous for the TNRCC not to apply this same logic to the extraneous
items set forth in the proposed rule subsections (b)(8) - (12) when these
items are likewise 'not specifically included in TWC §5.753 as required
components of compliance history.'"
The commission agrees with this comment in part. Specifically, with regard
to self-reported violations, the commission agrees that they are relevant,
and has modified the text at adopted §60.1(c)(7) to reflect that self-reported
notices of violations will be included. Moreover, the commission would also
point out that, as expressed in the proposal preamble, although complaints
are not listed as a specific, separate component of compliance history, the
underlying violation confirmed in substantiated complaints will be included
in compliance histories. The commenter's representation of the commission's
position on complaints has been taken out of context. The preamble goes on
to say, "... and further, other components included in this proposal would,
in effect, include pertinent aspects of this same information. For instance,
a citizen may file a complaint regarding an environmental incident. The executive
director will investigate, and if a violation is documented, then the executive
director will issue a notice of violation or initiate enforcement, as appropriate.
Thus, the complaint would be part of the compliance history via the notice
of violation or commission order. The commission notes that during the legislative
process citizen complaints were not included in HB 2912." However, the commission
does not agree that the nature of inspections should be included in the compliance
history components. The violations noted in any investigation will be incorporated
into the compliance history, regardless of whether it was an announced or
an unannounced investigation. Further, the underlying issue this raises is
more relevant to the next phase of compliance history rulemaking concerning
classification and use. However, the commission is not precluded from including
such information about an investigation in a compliance history by leaving
the language "as is." No change has been made in response to this comment.
The commission would point out that the dates of investigations are already
included as a component at adopted §60.1(c)(6). Finally, the commission
disagrees with the commenter's representation of how the commission has not,
in its proposal, applied the same logic to "the extraneous items set forth
in the proposed rule subsection (b)(8) - (12) when these items are 'not specifically
included in TWC §5.753 as components of compliance history.'" No change
has been made in response to this comment.
Vinson & Elkins commented regarding proposed §60.1(b), (adopted
as §60.1(c)). Vinson & Elkins stated, "The general language of {proposed} §60.1(b),
which appears to focus compliance history on the sites within the TNRCC's
jurisdiction, suggests that the enumerated components may be similarly limited.
If an entity's compliance history must include information concerning violations
of environmental laws of other states, it also should include information
concerning compliance with the laws and regulations of other states." Specifically,
Vinson & Elkins recommended inclusion of a new §60.1(b)(13), "information
concerning environmental management systems, participation in voluntary pollution
reduction programs, and compliance with environmental laws and regulations
of other states submitted by the entity which is the subject of the compliance
history review."
How the commission will use compliance history information regarding out
of state locations will be included in subsequent rulemaking regarding compliance
history use. Therefore, the commission makes no change in response to this
comment.
TIP and TCC commented regarding proposed §60.1(b), (adopted as §60.1(c)).
TIP commented that the commission "should allow industry the option of submitting
positive compliance-related information regarding out-of-state, as well as
in-state sites. Examples include, but are not limited to, the use of EMS,
participation in voluntary pollution reduction programs and voluntary audit
disclosures to the EPA." TCC commented that the commission "should balance
its review of operations in other states by also providing a mechanism ...
to consider positive contributions a company makes outside of Texas." Additionally,
in general, BP endorsed the comments submitted by TIP and TCC.
The commission responds that the proposed rule language does not preclude
the submission of positive compliance related information to the commission
to be included in their public record at the commission. The commission notes
that the mechanism by which this information would be available to the public
may be different if it does not fall under one of the categories listed in
adopted §60.1(c)(8) - (12). For example, if a company chooses to submit
an environmental report or audit results for the general public, it could
be available upon request with the company's files resident at the commission,
but it may not be able to be posted on the external website database to be
developed for use by the general public. In addition, the company can submit
information through their community outreach programs or environmental advocacy
groups regarding their compliance history. The commission makes no change
in response to this comment.
TIP commented regarding proposed §60.1(b), (adopted as §60.1(c)),
stating, "The draft version of the proposed compliance history definition
rule included community outreach programs as a (presumably positive) component
of an entity's compliance history. However, this requirement was deleted from
the final proposal. Community outreach programs and community advisory committees
are very beneficial aspects of industrial environmental compliance programs.
The TNRCC should restore this as a positive component of compliance history.
By removing this requirement, the agency has sent the message to industry
and the public that it believes positive relationships between local communities
and industry are not important." Additionally, in general, BP endorsed the
comments submitted by TIP.
The commission responds that community outreach programs and the degree
to which they are implemented varies widely among entities. It would be extremely
difficult for the commission to determine whether a community outreach program
is successful and effective as uniform standards used by all regulated entities
for these types of programs do not exist. In addition, whether the outreach
program results in environmental improvement is also difficult to determine.
Therefore, it is not practical and the resources do not exist to evaluate
every regulated entity's community outreach programs in order to determine
their positive impact on compliance history. The commission makes no change
in response to this comment.
Regarding proposed §60.1(b), (adopted as §60.1(c)), TIP stated
that, the commission "should consider efforts to go beyond current (and known
future) environmental requirements or 'over control' as positive components
of compliance history. Such efforts might include, but are not limited to,
enhanced monitoring and increased control device destruction/capture efficiency.
Such a positive component would encourage innovation in the development of
state-of-the-art technology, and reward companies that make an independent
effort to improve compliance." Additionally, in general, BP endorsed the comments
submitted by TIP.
The commission responds that adopted §60.1(c)(8) - (12) of the rule
language already consider efforts to go beyond compliance through these aspects
of compliance history and therefore makes no change in response to this comment.
§60.1(d), Change in Ownership
Representatives Burnam, Maxey, McClendon, and Puente and 17 individuals
commented regarding proposed §60.1(c), (adopted as §60.1(d)). Representatives
Burnam, McClendon, and Puente commented that the proposed rule weakens existing
compliance history standards instead of strengthening them. Representatives
Burnam, Maxey, and McClendon added that HB 2912 was intended to make compliance
history more comprehensive, but that the proposed rule would limit the compliance
history review to only the legal entity named in the permit for the facility.
Representatives Burnam, Maxey, McClendon, and Puente all stated that this
is contrary to existing practice, in that it would not include parent, sister,
subsidiary, or other closely related corporations. They further stated, "With
this loophole, any company could avoid a comprehensive compliance history
review merely by creating a new legal entity to run each of its facilities."
Similarly, 17 individuals commented that the proposed rule would limit the
compliance history review to only the legal entity named on the permit for
the facility. The individuals stated that this is contrary to existing practice,
in that it would not include parent, sister, subsidiary, or other closely
related corporations. The individuals stated, "Nothing in HB 2912 was intended
or could be construed to warrant this weakening of existing rules: HB 2912
was intended to make compliance histories more, not less, comprehensive. With
this loophole, any company could avoid a comprehensive compliance history
review by creating legal entities to run each of its facilities."
The proposed rule is consistent with the plain language of HB 2912, which
directs the commission to establish a set of standards for the classification
of a "person's compliance history." The statutory definition does not include
parent, sister, or subsidiary corporations. The TNRCC does not have the authority
to adopt rules which are inconsistent with the language of HB 2912. The TNRCC
believes that the establishing of a uniform definition of compliance history
components will in fact, result in a more effective approach to considering
compliance history by the agency. No changes have been made in response to
these comments.
GHASP, TCONR, and 503 individuals commented regarding proposed §60.1(c),
(adopted as §60.1(d)). The individuals and GHASP stated that the proposed
rules would actually weaken existing practice by allowing corporate "shell
games" and not including parent, sister, subsidiary, or other closely related
corporations in the history. One of the individuals commented that "the compliance
history should be a more transparent record that allows ordinary citizens
to gain an accurate picture of a firm's compliance with the law. It should
not be hobbled or made obscure by legal formalities such as corporate structure."
Another of the individuals commented that, "Since so many large companies
are made up of 'subs,' it is important that for reporting purposes, they are
NOT broken out but seen as one." GHASP commented further that, "It is unfair
to expect the public to sort out a tangled database of corporate aliases."
Similarly, TCONR stated, "The preamble to the proposed rule states that the
TNRCC intends to limit its compliance history reviews to the legal entity
name in a permit or permit application. This creates an enormous loophole
that is not only contrary to current agency practice, but will also allow
the compliance history program to be evaded and undermined. Indeed, as was
noted by several individuals, including regulated community representatives,
at the August 6, 2001 stakeholder meeting, the rule will actually provide
an incentive for regulated corporate entities to use parent, sister, subsidiary
or other closely related corporate entities in a shell game to avoid being
pegged with a history of poor performance. For example, a company may form
a separate subsidiary to run an individual facility or several facilities.
Even if the company has been the poorest performer in the State of Texas since
the beginning of environmental regulation, no evidence of its poor performance
will be factored into permitting or enforcement actions by the TNRCC." Additionally,
TCONR commented that proposed §60.1(c), regarding change of ownership,
"would provide an incentive for a bad actor to evade application of the rule
merely by changing its corporate name prior to the fifth year of a compliance
period. TNRCC should not collude with bad actors to allow them to evade the
new compliance history rules in this manner. We urge the agency to instead
carry out the intent of the legislature to ensure that poor performers are
not rewarded, no matter how inventive they may be in using alter-egos or an
array of corporate names to hide their past actions. The adopted rule must
provide that compliance history includes information on the compliance performance
of a parent, subsidiary, sister and other closely related corporations or
legal entities as is the existing practice of the agency."
The commission disagrees with these comments. First, not all "existing
practices" look to parent, sister, subsidiary, or other closely related corporations.
In existing 30 TAC §281.21(d), the rule only requires the development
of a compliance history for the applicant. There is no requirement for looking
at related entities. Furthermore, TWC, §5.754(a) requires that, "the
commission by rule shall establish a set of standards for the classification
of
a person's
compliance history" (emphasis
added). The statute only requires the development of a compliance history
for the "person" and not any parent, sister, subsidiary, or other closely
related corporations. The statute further requires in TWC, §5.753(a),
that the commission "develop a uniform standard of developing compliance history."
No change has been made in response to this comment.
ACT commented regarding proposed §60.1(c), (adopted as §60.1(d)),
that a company could change its legal name in the fourth year of the five-year
compliance period, and thereby avoid scrutiny of its statewide operations
for the previous four years. ACT stated that the final rule should reflect
existing agency practice of considering compliance history of closely related
corporate entities.
The commission responds that by looking at the entire five-year period
for a site, even when a sale of a facility has occurred, an accurate compliance
history picture will emerge. However, the commission believes it is necessary
to allow some degree of flexibility for companies that purchase facilities,
which is why the proposed rule allows that for any part of the compliance
period that involves a different owner, the compliance history will be assessed
for only the site under review. The proposed rule is consistent with the plain
language of HB 2912, which directs the commission to establish a set of standards
for the classification of a "person's compliance history." No changes have
been made in response to this comment.
TIP commented regarding proposed §60.1(c), (adopted as §60.1(d)),
that the proposed rule is inconsistent with the agency's current penalty policy
(to consider parent, sister, and daughter companies of a corporate entity).
TIP requested that the TNRCC specifically acknowledge in the preamble to the
rule that the underlying legislation requires revisions to the penalty policy
and that after the effective date of the legislation, the agency will refrain
from applying the compliance history provisions of the penalty policy in agency
enforcement actions. Additionally, in general, BP endorsed the comments submitted
by TIP.
As stated in the preamble of the proposed rule, not including parent, sister,
or daughter corporations for the purpose of developing compliance histories
represents a change from past agency practice for enforcement actions. However,
the commission does not believe it is appropriate to make changes to the penalty
policy in this rulemaking. To the extent that the penalty policy needs to
be changed, that will be done separate and apart from this rulemaking. No
change to the rule has been made.
Vinson & Elkins commented regarding proposed §60.1(c), (adopted
as §60.1(d)), that the rule should be reworded to provide that the compliance
history of all parties who previously owned or operated a site during the
applicable five-year period will not be considered in compiling the current
owner or operator's history. Vinson & Elkins also commented that the proposed
language suggests that the compliance history of a newly acquired site will
be "assessed" against a new owner. In instances where the existing history
for the site is negative, this may discourage responsible new owners from
acquiring troubled facilities and may deter rehabilitation of those sites.
Vinson & Elkins further added that it is unclear whether a change in ownership
distinction applies only to the site which is the subject of the action triggering
the compliance history review, or whether it applies to all sites which can
be mentioned in the compliance history. Vinson & Elkins added that the
proposed rule does not account for the complexities of business transactions
as shared facilities, joint ventures, and complex multi-owner sites are becoming
more common. The commenter suggested clarifying that the transfer of ownership
can occur within the boundaries of a site and by indicating that the compliance
history of a previous owner will not be considered a component of the compliance
history of a new owner. Finally, Vinson & Elkins suggested the following
language to subsection (c).
Change in ownership. If ownership or operation of the site, or a facility
within a site, under review changed during the applicable five-year period,
only the compliance history of the current owner or operator will be considered.
Information relating to compliance history of any previous owner or operator
of the site, or facility within a site, under review shall not be considered
a component of the compliance history of the current owner or operator. (1)
If the change in ownership applies only to a facility within a site, only
the compliance history for the facility within a site shall be considered.
(2) Change in ownership will be considered for all sites or facilities identified
on a compliance history.
The commission disagrees with these comments. The commission believes that
five years is an appropriate amount of time to obtain an accurate picture
of compliance for a site. However, the proposed rule does allow that for any
part of the compliance period that involves a different owner, the compliance
history will be assessed for only the site under review. Additionally, a five-year
compliance history will be prepared for the site under review. The commission
believes this is a necessary amount of time to obtain an accurate picture
of compliance for each site. The commission has included components such as
participation in a voluntary pollution reduction programs in the hope that
rehabilitated facilities will be given adequate consideration. Furthermore,
the preamble to the proposed rule stated that for any part of the compliance
history that involves a different owner, the compliance history would be assessed
for only the site under review. It is the intention of the commission to implement
the requirement of HB 2912 to develop a uniform standard for evaluating compliance
history. The commission believes five years is an appropriate length of time
to obtain an accurate picture of compliance for a site. Although the commission
acknowledges that in some cases this will be complicated, no change has been
made to the rule. However, the commission notes that it has added language
to the end of adopted §60.1(d) for further clarity, stating, "For the
purposes of this rule, a change in operator shall be considered a change in
ownership if the operator is a co-permittee."
TIP commented regarding proposed §60.1(c), (adopted as §60.1(d)),
that a shorter one- or two-year compliance history should be reviewed for
sites which are sold, as this will not penalize a high performing purchaser
for buying property from a poor performing seller. Additionally, in general,
BP endorsed the comments submitted by TIP.
The commission disagrees with this comment. Five years is an appropriate
amount of time to obtain an accurate picture of compliance for a site. However,
the proposed rule does allow that for any part of the compliance period that
involves a different owner, the compliance history will be assessed for only
the site under review. No change has been made in response to this comment.
TML and Plano commented regarding proposed §60.1(c), (adopted as §60.1(d)).
TML stated that the proposed change to not consider parent, sister, or daughter
corporations should be incorporated into the rule, probably as a definition
perhaps in Phase II if not Phase I. In addition, TML requested that regional
projects be added to the list of entities not included in considering a persons
compliance history. Similarly, Plano noted that in the preamble discussion
of proposed §60.1(c), the commission has included a "definition" of what
it considers ownership to be: "The commission has determined that for purposes
of developing compliance histories, 'ownership' would only include the entity
filing the permit application, under enforcement, being inspected, or applying
for participation in an innovative program, as defined by its legal name.
For example, any parent, sister, or daughter corporations related to the legal
entity would not be included." Plano recommended inclusion of this definition
in the rule for clarity of proposed §60.1(c).
The commission disagrees with this comment. The rule lists the components
to be considered in compiling a person's compliance history. Therefore it
is not necessary to define the term "person" in these rules. No change has
been made in response to this comment.
TMRA commented regarding proposed §60.1(c), (adopted as §60.1(d)),
stating that they are in support of TNRCC's interpretation that an entity's
compliance record applied only to that entity and not to parent or sister
companies.
The commission appreciates the positive comment in support of the rule.
The proposed rule is consistent with the plain language of HB 2912, which
directs the commission to establish a set of standards for the classification
of a "person's compliance history."
Jones Day commented regarding proposed §60.1(c), (adopted as §60.1(d)).
Jones Day commented, "If this section remains in this rulemaking package,
additional language in the preamble should clarify that the agency contemplates
tools and/or mechanisms by which a current owner can accelerate improvement
of its own compliance history, as distinct from a predecessor owner's compliance
history. Facility upgrades and other capitol expenditures that reduce the
likelihood that the mistakes of a predecessor company will be repeated should
be acknowledged in a meaningful way. In addition, this section of the rulemaking
should
facilitate ways to encourage
high performing
companies to purchase facilities from low performing companies and improve
the environmental performance by incorporating those sites into the high performing
company's programs and management systems. If the Commission provided for
a mechanism by which the poor compliance history that traveled with a facility
would exist for a shorter time period (perhaps two years) when the facility
was sold to a high performing company, the policy of encouraging such sales
would be promoted."
The commission responds that this comment is outside the scope of this
rulemaking. The commission acknowledges that TWC, §5.754, requires the
classification of a person's compliance history into one of a minimum of three
classifications, including "poor," "average," and "high." The proposed rule
is, however, only the first phase in developing the compliance history rules.
House Bill 2912, §18.05(a), requires the commission to establish the
components of compliance history, by rule, no later than February 1, 2002.
This is what the proposed rule is intended to accomplish, establishing the
components. House Bill 2912, §18.05(b), requires that the commission,
by rule, shall establish the standards for classification and use of compliance
history not later than September 1, 2002. This will be accomplished through
the second phase of rulemaking. Although TWC, §5.754, requires the commission
to classify a person's compliance history, rehabilitation of a facility from
a poor compliance history is outside the scope of this rulemaking. The ways
a regulated entity could improve their compliance history will be apparent
in the second phase of compliance history rulemaking in that instituting specific
positive components will improve compliance history. In addition, the commission
will be undertaking rulemaking governing the strategically directed regulatory
structure which will include regulatory tiers under which entities of all
compliance history levels will be governed. No change has been made in response
to this comment.
Plano and NTMWD commented regarding proposed §60.1(c), (adopted as §60.1(d)).
Plano requested that the commission clarify the applicability of compliance
histories in situations where a party is a member of a regional water, wastewater,
or solid waste authority. Plano cited as an example, that it is a member of
the NTMWD, which is a political subdivision of the state of Texas providing
regional water, wastewater, and solid waste disposal services. It stated that
NTMWD is comprised of 13 member cities, serving a total of 61 cities, towns,
and water supply corporations in five counties. Plano expressed concern about
how any actions taken against member cities and NTMWD would affect the compliance
histories of other member cities of NTMWD. Plano stated that it is unclear
from the language of proposed §60.1 whether a citation issued to NTMWD
would also be contained in another member city's compliance history. NTMWD
similarly stated that proposed §60.1(b) "provides that 'compliance history
shall include multimedia compliance-related information about a person, specific
to the site which is under review, as well as other sites which are under
the commission's jurisdiction and owned or operated by the same person.'"
NTMWD further stated that the proposal preamble states, "'For example, any
parent, sister, or daughter corporation related to the legal entity would
not be included' in the definition of 'ownership.'" NTMWD stated that it "agrees
with the Commission on this issue, but believes that it should be clarified
to address how compliance history will affect regional governmental entities
that are made up of, for example, member cities. A reasonable analogy to the
parent/sister company policy of not considering the compliance history of
such related companies (i.e. looking only at the compliance history of the
entity in question) is that for regional governmental entities, the Commission
also will only look to the compliance history of the entity in question. Thus,
if the compliance history of the regional entity is being evaluated, the Commission
will not look at the individual compliance histories of member cities. The
reverse would also be true. If the Commission were considering the compliance
history of a member city, the compliance history of the regional governmental
history would not be considered and would not affect the compliance history
of the member city. Because there are a number of different types of regional
entities in Texas, NTMWD believes that the Commission should clarify that
the compliance history of a regional governmental entity will not affect the
compliance history of a member of such entity, and vice versa."
The commission responds that as proposed, only actions against, or activities
of, the legal entity filing the permit application, under enforcement, being
inspected, or applying for participation in an innovative program would be
considered in a compliance history. In other words, if City A, City B, and
City C are all members of ABC District, and independent enforcement actions
have been taken against both City A and ABC District during the five-year
period prior to City C applying for a permit, the enforcement actions against
City A and ABC District would not be counted in City C's compliance history.
No change has been made in response to this comment.
Cantey & Hanger commented regarding proposed §60.1(c), (adopted
as §60.1(d)). Cantey & Hanger commented, "It is unclear what entity
(entities) the TNRCC will be evaluating when assembling the components for
compliance history. The regulated entity's compliance history should be based
on individual components for that particular entity rather than including
all other entities related to the individual regulated entity in the compliance
history, e.g. Partnership Y which has a percentage ownership in Corporation
X should not have all Y's past enforcement orders included as a component
in the compliance history assessment for X (and vice versa)."
The commission responds that, as specified in the proposal preamble, for
purposes of developing compliance histories, ownership would only include
the entity filing the permit application, under enforcement, being inspected,
or applying for participation in an innovative program, as defined by its
legal name. No change has been made to the rule in response to this comment.
BP and TCC commented regarding proposed §60.1(c), (adopted as §60.1(d)).
BP stated, "TNRCC indicates in the proposed rule that if ownership of a site
changes during the five-year compliance period, the compliance history for
each site will remain distinct during that period. At a minimum, TNRCC should
ensure that each company participating in mergers, acquisitions, shared sites,
or purchases of other sites should be allowed to keep their existing compliance
history status for at least two years following the change. During this 'amnesty
period,' the acquiring company could address any identified compliance issues."
Additionally, BP commented that "{o}ther complex business relationships, while
not defined as a 'change in ownership,' should be given special consideration
in developing this rule related to compliance history. For example, there
are some petrochemical plants that 'share' control devices. In these situations,
a distinction should be made between the 'owner' of the equipment and the
'user' of the equipment when the owner and the user are not the same entity.
Consider the following: If the 'owner' of a flare did not perform required
flare testing, the 'owner' might be potentially impacted on their compliance
history. The 'user' of the flare, however, should not be impacted. If a 'user'
of a flare failed to properly report emissions they sent to the flare, then
the 'user' might potentially be impacted on their compliance history, but
the 'owner' should not be affected. The compliance history should provide
equity for both the 'owner' and 'user' of a shared device." TCC stated that
the TNRCC should give special consideration to joint ventures and assure that
only compliance history from a specific joint venture is included in compliance
history. TCC commented that other complex business relationships should be
given special considerations, such as situations where petrochemical plants
share control devices. In these situations, a distinction should be made between
the owner of the equipment and the user of the equipment when they are not
the same entity. Additionally, in general, BP endorsed the comments submitted
by TCC.
The commission disagrees with these comments. It is the intention of the
commission to implement the requirement of HB 2912 to develop a uniform standard
for evaluating compliance history. The commission believes five years is both
adequate and reasonable for considerations of compliance history because this
time period is long enough to detect any overall pattern related to compliance.
The five-year period is consistent with the length of time currently utilized
in preparing many compliance summaries, and is also the length of time used
in evaluating compliance history for purposes of commission enforcement actions.
Additionally, the commission responds that, as specified in the proposal preamble,
for purposes of developing compliance histories, ownership would only include
the entity filing the permit application, under enforcement, being investigated,
or applying for participation in an innovative program, as defined by its
legal name. In the flare example provided, only those compliance history components
that had been previously taken by, or levied against, the applicant, respondent
in an enforcement case, or the owner of the site to be investigated would
be included in that person's compliance history. No change has been made to
the rule as a result of these comments.
TPCA, 7-Eleven, and ICE commented regarding proposed §60.1(c), (adopted
as §60.1(d)). TPCA and 7-Eleven stated that the proposed rule and preamble
do not address how the agency will address situations where a site is subject
to remedial activity that may be implemented over many years. TPCA and 7-Eleven
further commented that in such cases it is common for multiple parties to
be owners or operators of a site, but at the same time these owners do not
otherwise have any connection to the remedial obligation. Similarly, ICE stated
that in the PST realm, compliance aspects are especially complex when property
transfers take place, adding that many sites either have remediation systems
in operation, or are obligated by site circumstances to put in a system. ICE
asserted that TNRCC staff must take exceptional measures to establish the
ownership/operation trail over time.
The commission responds that the fact that remedial action is required
and has been, or is being undertaken, does not constitute a component of compliance
history. Rather, it is the violations that may have resulted in the need to
perform remediation that would be components. As such, those components (enforcement
orders, court judgments, consent decrees, criminal convictions, NOVs) are
dated, and would only be included in compliance histories complied for five
years subsequent to the dates of those components, even if the remediation
activities took longer than five years. However, should the site change hands
during the five-year period after the effective date of the component(s),
the component(s) for the previous owner, at that site only, would still be
included in compliance histories compiled for applicable applications submitted
for, enforcement actions concerning, and investigations conducted at that
site for the full five-year period. No changes have been made in response
to this comment.
TPCA, ICE, and 7-Eleven commented regarding proposed §60.1(c), (adopted
as §60.1(d)). TPCA, ICE, and 7-Eleven stated that they support the exclusion
of all information pertaining to other facilities owned by a seller/transferor
of the subject property. ICE stated that it disagrees that portions of the
compliance history relating to a prior owner should be included. TPCA, ICE,
and 7-Eleven all stated that they disagree that portions of the five-year
compliance history relating to a prior owner of a subject property should
be included in the new owners compliance history. TPCA and ICE asserted that
HB 2912 does not explicitly call for an involuntary transfer of liability,
and the compliance history rules should not modify existing state corporate
law provisions concerning transfers of liabilities and legal obligations.
The commission appreciates that positive comments in support of the rule.
It is the intention of the commission to implement the requirement of HB 2912
to develop a uniform standard for evaluating compliance history. The commission
believes five years is both adequate and reasonable for considerations of
compliance history because this time period is long enough to detect any overall
pattern related to compliance. The commission has determined that by looking
at the entire five-year period for a site, even when a sale of a facility
has occurred, an accurate compliance history picture will emerge. However,
the commission believes it is necessary to allow some degree of flexibility
for companies that purchase facilities, which is why the rule allows that
for any part of the compliance period that involves a different owner, the
compliance history will be assessed for only the site under review. The five-year
period is consistent with the length of time currently utilized in preparing
many compliance summaries, and is also the length of time used in evaluating
compliance history for purposes of commission enforcement actions. Furthermore,
the rule is not intended to change existing state law; the rule applies only
to the time period used to assess compliance history, and in no way applies
to business liabilities covered by other laws. No changes have been made in
response to these comments.
Vinson & Elkins and WMT commented regarding proposed §60.1(c),
(adopted as §60.1(d)). Vinson & Elkins stated "we are aware that
the valuation of compliance history is left to Phase 2 of the compliance history
rulemaking. However, the 'Change in ownerships' section of the proposed rule
suggests that the compliance history for a newly acquired site will be 'assessed'
against a new owner. Although it is not clear that this will always be a negative
consideration, in instances where the existing history for the site is negative,
sale or acquisition of the site may be affected by the 'assessment.' This
may discourage responsible new owners from acquiring troubled facilities and
may deter rehabilitation of those facilities. This is particularly true where
the newly acquired facility's history may affect the potential new owner's
other facilities' compliance history, i.e. if the site specific history is
assessed against the new owner, a permit action at the new owner's other facility
may be deterred. We believe that this phase should address only the ingredients
and not determine or suggest the compliance history recipe. These rules should
facilitate changes in ownership and provide an incentive for new owners that
will restore compliance and not to create compliance history orphans." Vinson &
Elkins recommended the following language to subsection (c).
Change in ownership. In addition to the requirements in subsection (b)
of this section, if ownership of the site changed during the five-year compliance
period, a distinction of compliance history for each owner during that five-year
period shall be made. For any part of the compliance period that involves
a different owner, the compliance history for only the site under review will
be compiled.
Similarly, WMT commented, "The TNRCC should remove new owner disincentives
in the draft rule." WMT stated that it is "concerned about the 'ownership'
provision in section (c) of the proposed rule. WMT recommends that the current
draft provision be changed to require that the information for the prior owner
be
compiled
for only the facility in question
but not 'assessed' as the draft rule states. 'Assessed' suggests that the
prior owner's history will be 'counted' for compliance history purposes. If
the rule remains as drafted, the buying and selling of facilities will be
negatively impacted. Facilities with a bad compliance history will be significantly
less attractive to prospective compliant purchasers that, if given the opportunity,
would improve the facility's environmental performance. Perhaps, the TNRCC
plans to deal with the specifics of this assessment in Phase 2 of the compliance
history rules, but the draft rule should be clarified to remove the suggestion
that the facility's compliance history will count against a future owner."
The commission agrees in part with these comments. As such, the language
in the proposed rule has been changed to read: "...for any part of the compliance
period that involves a previous owner, the compliance history will include
only the site under review." The word "assessed" has been removed from the
draft rule. However, HB 2912 specifically requires that changes in ownership
be included as a component of compliance history, so the commission will not
remove changes in ownership as a component. Additionally, it is the intention
of the commission to implement the requirement of HB 2912 to develop a uniform
standard for evaluating compliance history. The commission believes five years
is both adequate and reasonable for considerations of compliance history because
this time period is long enough to detect any overall pattern of related to
compliance. The commission has determined that by looking at the entire five-year
period for a site, even when a sale of a facility has occurred, an accurate
compliance history picture will emerge. However, the commission believes it
is necessary to allow some degree of flexibility for companies that purchase
facilities, which is why the proposed rule allows that for any part of the
compliance period that involves a different owner, the compliance history
will be assessed for only the site under review. The five-year period is consistent
with the length of time currently utilized in preparing many compliance summaries,
and is also the length of time used in evaluating compliance history for purposes
of commission enforcement actions.
PHA commented regarding proposed §60.1(c), (adopted as §60.1(d)),
stating that when an entity acquires a facility from a wholly unrelated previous
owner during the five-year period, the previous owner's compliance history
is not an indication of the compliance record of the new owner. PHA commented
that a distinction should be made where no corporate consanguinity exist.
The commission has determined that by looking at the entire five-year period
for a site, even when a sale of a facility has occurred, an accurate compliance
history picture will emerge. However, the commission believes it is necessary
to allow some degree of flexibility for companies that purchase facilities,
which is why the proposed rule allows that for any part of the compliance
period that involves a different owner, the compliance history will be assessed
for only the site under review. No changes have been made in response to this
comment.
ATINGP commented regarding proposed §60.1(c), (adopted as §60.1(d)),
stating that the language of the rule should be changed so that instead of
referencing "site under review," the rule should be changed to "current owner"
because HB 2912 directs the commission to consider the compliance history
of a person, not a site. In addition, only the compliance history of the current
owner is relevant to enforcement and permitting actions.
The commission disagrees with this comment. In preparing a compliance history
for a specific site, the TNRCC will be preparing a history for each "person"
who has owned the site during the past five years. The commission believes
this is consistent with the intent of the legislation. No change was made
to the rule as a result of this comment.
Fiscal Note
Birch & Becker commented, with regard to the Fiscal Note, that the
"TNRCC has determined that, since the Phase I rules are entirely procedural
in nature, there are no anticipated additional costs for units of state and
local government." The commenter added, "When read in conjunction with the
Phase II rules, the currently proposed components might result in additional
costs... It is impossible to evaluate the cost impact on the proposed rules
without knowing how other substantive features of the compliance history rules
will be defined in Phase II. Additionally comments on the cost issue may be
submitted during the Phase II proposal."
The commission responds that an additional Fiscal Note, from the perspective
of the implementation of the second phase of compliance history rulemaking
pertaining to classification and use, will be included in the proposal preamble
for the second phase.
STATUTORY AUTHORITY
The new section is adopted under TWC, §5.753, which requires the commission,
by rule, to develop a uniform standard for evaluating compliance history;
TWC, §5.102, which gives the commission general powers necessary and
convenient to exercise jurisdiction authorized by the code; TWC, §5.103,
which provides the commission authority to adopt any rules necessary to carry
out its powers and duties under this code and other laws of this state and
to adopt rules repealing any statement of general applicability that interprets
law or policy; TWC, §5.105, which authorizes the commission to establish
and approve all general policy of the commission by rule; and TWC, §26.011,
which gives the commission the powers and duties to carry out its responsibilities
specified in chapter 26 of the code. The new rule is also authorized under
THSC, §361.011, which gives the commission powers and duties relating
to solid waste management; THSC, §361.017, which gives the commission
powers and duties necessary to manage industrial solid waste and hazardous
municipal waste; THSC, §361.018, which gives the commission powers necessary
to regulate the management of hazards waste components of radioactive waste;
THSC,§361.024, which provides the commission with the authority to adopt
rules necessary to carry out its power and duties under the Texas Solid Waste
Disposal Act; THSC, §382.011, which gives the commission general powers
and duties to control the quality of the state's air; THSC, §382.017,
which provides the commission with the authority to adopt rules consistent
with the policy and purposes of the Texas Clean Air Act; and THSC, §401.051,
which provides the commission with authority to adopt rules and guidelines
relating to the control of sources of radiation under the Texas Radiation
Control Act.
§60.1.Compliance History.
(a)
Applicability. The provisions of this chapter are applicable
to all persons subject to the requirements of Texas Water Code (TWC), Chapters
26 and 27, and Texas Health and Safety Code (THSC), Chapters 361, 382, and
401.
(1)
Specifically, the agency will utilize compliance history
when making decisions regarding:
(A)
the issuance, renewal, amendment, modification, denial,
suspension, or revocation of a permit;
(B)
enforcement;
(C)
the use of announced investigations; and
(D)
participation in innovative programs.
(2)
For purposes of this chapter, the term "permit" means licenses,
certificates, registrations, approvals, permits by rule, standard permits,
or other forms of authorization.
(3)
With respect to authorizations, this chapter only applies
to forms of authorization, including temporary authorizations, that require
some level of notification to the agency, and which, after receipt by the
agency, requires the agency to make a substantive review of and approval or
disapproval of the authorization required in the notification or submittal.
For the purposes of this rule, "substantive review of and approval or disapproval"
means action by the agency to determine, prior to issuance of the requested
authorization, and based on the notification or other submittal, whether the
person making the notification has satisfied statutory or regulatory criteria
that are prerequisites to issuance of such authorization. The term "substantive
review or response" does not include confirmation of receipt of a submittal.
(4)
Notwithstanding paragraphs (2) and (3) of this subsection,
this chapter does not apply to certain permit actions such as:
(A)
voluntary permit revocations;
(B)
minor amendments and nonsubstantive corrections to permits;
(C)
Texas pollutant discharge elimination system and underground
injection control minor permit modifications;
(D)
Class 1 solid waste modifications, except for changes in
ownership;
(E)
municipal solid waste Class I modifications, except for
temporary authorizations and municipal solid waste Class I modifications requiring
public notice;
(F)
permit alterations;
(G)
administrative revisions; and
(H)
air quality new source review permit amendments which meet
the criteria of §39.402(a)(1) - (3) of this title (relating to Applicability
to Air Quality Permit Amendments) and minor permit revisions under Chapter
122 of this title (relating to Federal Operating Permits).
(5)
Further, this chapter does not apply to occupational licensing
programs under the jurisdiction of the commission.
(6)
Beginning February 1, 2002, the executive director shall
develop compliance histories with the components specified in this chapter.
(7)
Beginning September 1, 2002, this chapter shall apply to
the use of compliance history in agency decisions relating to:
(A)
applications submitted on or after this date for the issuance,
amendment, modification, or renewal of permits;
(B)
inspections and flexible permitting;
(C)
a proceeding that is initiated or an action that is brought
on or after this date for the suspension or revocation of a permit or the
imposition of a penalty in a matter under the jurisdiction of the commission;
and
(D)
applications submitted on or after this date for other
forms of authorization, or participation in an innovative program, except
for flexible permitting.
(8)
If a motion for reconsideration or a motion to overturn
is filed under §50.39 or §50.139 of this title (relating to Motion
for Reconsideration; and Motion to Overturn Executive Director's Decision)
with respect to any of the actions listed in paragraph (4) of this subsection,
and is set for commission agenda, a compliance history shall be prepared by
the executive director and filed with the Office of the Chief Clerk no later
than six days before the Motion is considered on the commission agenda.
(b)
Compliance period. The compliance history period includes
the five years prior to the date the permit application is received by the
executive director; the five-year period preceding the date of initiating
an enforcement action with an initial enforcement settlement offer or the
filing date of an Executive Director's Preliminary Report (EDPR), whichever
occurs first; for purposes of determining whether an announced investigation
is appropriate, the five-year period preceding an investigation; or the five
years prior to the date the application for participation in an innovative
program is received by the executive director. The compliance history period
may be extended beyond the date the application for the permit or participation
in an innovative program is received by the executive director, up through
completion of review of the application.
(c)
Components. The compliance history shall include multimedia
compliance-related information about a person, specific to the site which
is under review, as well as other sites which are owned or operated by the
same person. The components are:
(1)
any final enforcement orders, court judgments, consent
decrees, and criminal convictions of this state and the federal government
relating to compliance with applicable legal requirements under the jurisdiction
of the commission or the EPA. "Applicable legal requirement" means an environmental
law, regulation, permit, order, consent decree, or other requirement;
(2)
notwithstanding any other provision of the TWC, orders
developed under TWC, §7.070 and approved by the commission on or after
February 1, 2002;
(3)
to the extent readily available to the executive director,
final enforcement orders, court judgments, and criminal convictions relating
to violations of environmental laws of other states;
(4)
chronic excessive emissions events. For purposes of this
chapter, the term "emissions event" is the same as defined in THSC, §382.0215(a);
(5)
any information required by law or any compliance-related
requirement necessary to maintain federal program authorization;
(6)
the dates of investigations;
(7)
all written notices of violation, including written notification
of a violation from a regulated person, issued on or after September 1, 1999,
except for those administratively determined to be without merit and specifying
each violation of a state environmental law, regulation, permit, order, consent
decree, or other requirement;
(8)
the date of letters notifying the executive director of
an intended audit conducted and any violations disclosed under the Texas Environmental,
Health, and Safety Audit Privilege Act, 74th Legislature, 1995;
(9)
the type of environmental management systems, if any, used
for environmental compliance;
(10)
any voluntary on-site compliance assessments conducted
by the executive director under a special assistance program;
(11)
participation in a voluntary pollution reduction program;
(12)
a description of early compliance with or offer of a product
that meets future state or federal government environmental requirements;
and
(13)
the name and telephone number of an agency staff person
to contact for additional information regarding compliance history.
(d)
Change in ownership. In addition to the requirements in
subsections (b) and (c) of this section, if ownership of the site changed
during the five-year compliance period, a distinction of compliance history
of the site under each owner during that five-year period shall be made. Specifically,
for any part of the compliance period that involves a previous owner, the
compliance history will include only the site under review. For the purposes
of this rule, a change in operator shall be considered a change in ownership
if the operator is a co-permittee.
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 December 20, 2001.
TRD-200108176
Stephanie Bergeron
Director, Environmental Law Division
Texas Natural Resource Conservation Commission
Effective date: January 9, 2002
Proposal publication date: October 12, 2001
For further information, please call: (512) 239-5017
Subchapter L. ON-ROAD ENGINES
Chapter 60.
COMPLIANCE HISTORY
Chapter 114.
CONTROL OF AIR POLLUTION FROM MOTOR VEHICLES