TITLE 30.ENVIRONMENTAL QUALITY

Part 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

Chapter 37. FINANCIAL ASSURANCE

Subchapter J. FINANCIAL ASSURANCE FOR RECYCLING FACILITIES

30 TAC §§37.901, 37.911, 37.921, 37.931

The Texas Commission on Environmental Quality (commission) proposes amendments to §§37.901, 37.911, 37.921, and 37.931.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

This rulemaking implements the requirements of House Bill 1823, 78th Legislature, 2003, which amends Texas Health and Safety Code (THSC), §361.119, to require that owners and operators of recycling facilities, including composting or mulching facilities, have sufficient financial assurance in place. The financial assurance must be conditioned on satisfactorily operating and closing the facility, consistent with the requirements of THSC, §361.085, for a solid waste facility other than a facility for the disposal of hazardous waste. House Bill 1823 applies to an owner or operator of a recycling facility at which combustible material is stored outdoors or that poses a significant risk to public health and safety as determined by the commission. The legislation also exempts a facility that is owned, operated, or affiliated with a person who has a permit to dispose of municipal solid waste from rules adopted under this section of law.

Corresponding rulemakings published in this issue of the Texas Register include changes to 30 TAC Chapter 328, Waste Minimization and Recycling; Chapter 330, Municipal Solid Waste; Chapter 332, Composting; and Chapter 335, Industrial Solid Waste and Municipal Hazardous Waste.

SECTION BY SECTION DISCUSSION

Administrative and grammatical changes are proposed throughout the sections to be consistent with Texas Register requirements and to improve readability. The title of Subchapter J is changed from "Financial Assurance for Permitted Compost Facilities" to "Financial Assurance for Recycling Facilities."

Proposed §37.901, Applicability, amends incorrect terminology and adds cross-references to establish consistency in the commission's rules.

Proposed §37.911, Definitions, adds cross-references to establish consistency in the commission's rules.

Proposed §37.921, Financial Assurance Requirements for Closure, amends incorrect terminology. Paragraphs (1) and (3) - (5) outline financial assurance requirements that will not apply to owners and operators of recycling facilities. Paragraph (2) specifies that financial assurance mechanisms must be submitted to the executive director 60 days prior to receipt of materials at new facilities while mechanisms related to existing facilities must be submitted when directed by the executive director. Paragraph (6) requires that insurers providing insurance as a financial assurance mechanism must be either licensed to transact the business of insurance in Texas or eligible to provide insurance as an excess or surplus insurer in Texas.

Proposed §37.931, Financial Assurance Mechanism, amends incorrect terminology and explains the types of financial assurance mechanisms that cannot be used to demonstrate financial assurance.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jeffrey Horvath, Analyst, Strategic Planning and Grants Management, determined that for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency as a result of the administration or enforcement of the proposed rules. No fiscal implications are anticipated for other units of state or local government as a result of the proposed rules.

The proposed amendments implement House Bill 1823. The proposed amendments require owners or operators of recycling facilities that store combustible material outdoors or recycling facilities that pose a significant risk to public health and safety to have sufficient financial assurance to properly operate and close the facility. The proposed amendments do not apply to a facility that is owned or operated by, or affiliated with a person who has a permit to dispose of municipal solid waste or to facilities owned or operated by local governments, affiliates of metal smelters, or facilities that accept no financial compensation to accept materials.

The agency estimates that there are approximately 206 composting, recycling, and industrial recycling facilities that may store combustible materials and otherwise be subject to the proposed rules. Under the proposed amendments, owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. The agency's Waste Permits Division would need to evaluate closure cost estimates submitted by the facilities, and the agency's Financial Administration Division would need to review and monitor financial assurance mechanisms obtained by the facilities. These operational impacts are expected to have fiscal implications for the agency, though they are not anticipated to be significant.

PUBLIC BENEFITS AND COSTS

Mr. Horvath also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the enforcement of and compliance with the proposed rules will be compliance with state law. Financial assurance for recycling facilities may also provide financial support in some cases to local governments if they are ever faced with the costs of closing one of the affected facilities.

Fiscal implications, which may be significant, are anticipated for businesses and individuals affected by the proposed amendments.

Owners and operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety would need to obtain sufficient financial assurance to cover the costs of properly closing the facility. Owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. These closure cost estimates would be submitted for approval to the agency. Except for facilities that have a tangible net worth of at least $10 million and meet other financial qualifications to self-insure, affected facilities will incur an annual cost to obtain a financial assurance mechanism. Financial assurance costs will vary depending upon the specific facility, as well as the financial strength and size of the owner/operator. If affected owners and operators do not meet the qualifications of the financial test, they could obtain financial assurance in the form of a surety bond, letter of credit, trust, or the purchase of an insurance policy. These costs are estimated to range between 1% and 5% per year of the cost of closing the facility.

Costs to properly close most composting, mulching, and affected recycling facilities are estimated to range between $20,000 and $200,000 depending upon the amount and type of material that would need to be disposed of, and the method of disposal. A few larger facilities may require up to $2 million to properly dispose of their wastes, while some smaller facilities may require less than $20,000. For the purposes of this fiscal note, it is assumed that for the estimated 206 affected facilities, most of them would incur costs of between $20,000 and $200,000 to properly close their site. Further, the cost to obtain proper financial assurance is estimated to be 5% of the closure costs, and is therefore estimated to be between $1,000 and $10,000 per year for each of the estimated 206 affected facilities. Total costs for all owners and operators are roughly estimated to be as low as $206,000 and as high as $2.06 million each year for the five-year period covered by the fiscal note.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Adverse fiscal implications are anticipated as a result of implementation of the proposed rules for small or micro-businesses. It is not known how many of the estimated 206 affected facilities are small or micro-businesses, but it is likely that most of these facilities would meet the criteria.

The following is an analysis of the potential costs per employee for small or micro-businesses affected by the proposed amendments. Small and micro-businesses are defined as having fewer than 100 or 20 employees, respectively. A small business that purchases a financial assurance mechanism could incur additional costs of between $1,000 to $10,000 per year or between $10.00 and $100 per employee. A micro-business that purchases financial assurance could incur additional costs of between $50 and $500 per employee.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rules in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rules are not subject to §2001.0225 because they do not meet the criteria for a "major environmental rule" as defined in that statute.

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, 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 specific intent of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. Therefore, it is not anticipated that the proposed rules will 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 commission concludes that these proposed rules do not meet the definition of a major environmental rule.

Furthermore, even if the proposed rules did meet the definition of a major environmental rule, the proposed rules are not subject to Texas Government Code, §2001.0225, because they do not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed rules do not meet any of these requirements. First, there are no applicable federal standards that these rules would address. Second, the proposed rules do not exceed an express requirement of state law, but instead implement the statutory requirement of THSC, §361.119. Third, there is no delegation agreement that would be exceeded by these proposed rules because none relate to this subject matter. Fourth, the commission proposes these rules under the direction of House Bill 1823, amending THSC, §361.119, and not solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed an assessment of whether the proposed rules constitute a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. The proposed rules would substantially advance this stated purpose by requiring that regulated facilities obtain adequate financial assurance to properly close a facility.

Promulgation and enforcement of these proposed rules would be neither a statutory nor a constitutional taking of private real property because the proposed rules do not affect real property.

In particular, there are no burdens imposed on private real property, and the proposed rules would improve the commission's ability to ensure proper closure of certain recycling facilities. Because the regulation does not affect real property, it does not burden, restrict, or limit an owner's right to property or reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. Therefore, these proposed rules will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), concerning rules subject to the Texas Coastal Management Program (CMP), and therefore, requires that goals and policies of the CMP be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed rulemaking is consistent with CMP goals and policies because the rulemaking is an administrative action that requires financial mechanisms to pay for closure activities; will not have direct or significant adverse effect on any coastal natural resource areas; will not have a substantive effect on commission actions subject to the CMP; and promulgation and enforcement of the proposed rules will not violate (exceed) any standards identified in the applicable CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

ANNOUNCEMENT OF HEARING

The commission will hold a public hearing on this proposal in Austin on May 20, 2004 at 10:00 a.m. in Building F, Room 2210, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes before the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-002-037-AD. Comments must be received by 5:00 p.m., May 24, 2004. For further information or questions concerning this proposal, please contact Debi Dyer, Policy and Regulations Division, at (512) 239-3972.

STATUTORY AUTHORITY

The amendments are proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendments implement House Bill 1823.

§37.901.Applicability.

This subchapter applies to owners and operators [ an owner or operator ] of recycling facilities [ a compost facility ] required to provide evidence of financial assurance under Chapters 328, 330, 332, or 335 of this title (relating to Waste Minimization and Recycling; Municipal Solid Waste; Composting; and Industrial Solid Waste and Municipal Hazardous Waste) [ Chapter 332 of this title (relating to Composting) ]. This subchapter establishes requirements and mechanisms for demonstrating financial assurance for closure.

§37.911.Definitions.

Definitions for terms that appear throughout this subchapter may be found in Subchapter A of this chapter (relating to General Financial Assurance Requirements), as well as Chapters 328, 330, 332, and 335 of this title (relating to Waste Minimization and Recycling; Municipal Solid Waste; Composting; and Industrial Solid Waste and Municipal hazardous Waste) [ Chapter 332 of this title (relating to Composting) ].

§37.921.Financial Assurance Requirements for Closure.

In addition to the requirements of this subchapter, owners and [ or ] operators of recycling facilities [ a compost facility ] required to demonstrate financial assurance for closure must comply with Subchapters A - D [ A, B, C, and D ] of this chapter (relating to General Financial Assurance Requirements; Financial Assurance Requirements for Closure, Post Closure, and Corrective Action; Financial Assurance Mechanisms for Closure, Post Closure, and Corrective Action; and Wording of the Mechanisms for Closure, Post Closure, and Corrective Action) except: [ . ]

(1) §37.31 of this title (relating to Submission of Documents) is not applicable;

(2) owners or operators shall submit an originally signed financial assurance mechanism to the executive director 60 days prior to receipt of materials or as otherwise directed by the executive director;

(3) §37.131 of this title (relating to Annual Inflation Adjustments to Closure Cost Estimates) is not applicable;

(4) §37.161 of this title (relating to Establishment of a Standby Trust) is not applicable;

(5) §37.241(b) of this title (relating to Insurance) is not applicable; and

(6) insurers providing insurance in accordance with §37.241 of this title must be licensed to transact the business of insurance in Texas or eligible to provide insurance as an excess or surplus lines insurer in Texas.

§37.931.Financial Assurance Mechanisms.

Owners and operators [ An owner or operator ] subject to this subchapter may use any of the financial assurance mechanisms as specified in Subchapter C of this chapter (relating to Financial Assurance Mechanisms for Closure, Post Closure, and Corrective Action) to demonstrate financial assurance for closure except: [ . ]

(1) a pay-in trust fund may not be used; and

(2) a surety bond guaranteeing performance may not be used unless the owner or operator is required to provide financial assurance under §332.47 of this title (relating to Permit Application Preparation).

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402387

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Chapter 288. WATER CONSERVATION PLANS, DROUGHT CONTINGENCY PLANS, GUIDELINES AND REQUIREMENTS

The Texas Commission on Environmental Quality (commission) proposes amendments to §§288.1 - 288.5, 288.20 - 288.22, and 288.30.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

In 2003, the 78th Legislature passed House Bill 2660, House Bill 2663, and Senate Bill 1094. House Bill 2660 amended Texas Water Code (TWC), §11.1271, and mandated that the commission require certain existing surface water right holders and future surface water right applicants to include specific, quantified five-year and ten-year targets for water savings in their water conservation plans by May 1, 2005. Amended TWC, §11.1271, also requires five-year and ten- year targets for water savings in the water conservation plans of future surface water right applicants and holders of an existing permit, certified filing, or certificate of adjudication for the appropriation of surface water in the amount of 1,000 acre-feet a year or more for municipal, industrial, and other uses, and 10,000 acre-feet a year or more for irrigation uses. Finally, TWC, §11.1271, includes the deadline for the regulated community to submit its revised water conservation plans and implementation reports to the executive director.

House Bill 2663 amended TWC, §11.1272, to establish target quantified goals for drought contingency plans of wholesale and retail public water suppliers and irrigation districts to be achieved in periods of water shortages and drought by May 1, 2005. TWC, §11.1272, requires wholesale and retail public water suppliers and irrigation districts to amend their drought contingency plans to include quantified targets for water use reductions; however, these quantified targets are only guidelines.

Senate Bill 1094 created the Water Conservation Implementation Task Force (task force). This task force is required to advise the Texas Water Development Board and the commission on standardized methodology for reporting and using municipal per capita water use data. To accomplish that goal, the task force developed and on January 26, 2004 approved a definition for "municipal use in gallons per capita per day."

As required by House Bill 2660 and House Bill 2663, the commission is working in conjunction with the Texas Water Development Board to implement this legislation. Additionally, the commission proposes to include the definition of "Municipal use in gallons per capita per day," as approved by the task force, in these amendments to ensure consistency in the use of the term between the Texas Water Development Board and the commission..

SECTION BY SECTION DISCUSSION

Throughout this rulemaking, the commission has made wording changes to bring the existing rule language into agreement with agency rule writing standards.

The commission specifically solicits comments on changes to ensure that entities preparing water conservation plans assess all reasonable water conservation measures in deciding what options to include and to ensure that the commission has adequate information for reviewing applications for new or amended permits to ensure that all appropriate conservation measures are included.

Subchapter A, Water Conservation Plans

The commission proposes amendments to this subchapter to implement House Bill 2660.

Amended §288.1, Definitions, would add a definition for municipal use in gallons per capita per day. House Bill 2660 requires target goals to be in "municipal use in gallons per capita per day" and the commission proposes the addition of this definition, as adopted by the task force, to ensure consistency between the commission and the Texas Water Development Board in the use of this term. Subsequent definitions would be renumbered to accommodate the new term.

Amended §288.2, Water Conservation Plans for Municipal Uses by Public Water Suppliers, contains revisions to the rule that would apply to water conservation plans for municipal uses by public water suppliers.

Amended §288.2(a)(1)(B) would specify that the current requirement for specification of conservation goals will remain in effect until May 1, 2005, to account for water conservation plans for municipal use by public water suppliers that are prepared before the statutory deadline of May 1, 2005.

New §288.2(a)(1)(C) would add the requirement that the public water supplier specify in its water conservation plans for municipal uses specific, quantified five-year and ten-year targets for water savings to include goals for water loss programs and goals for "municipal use in gallons per capita per day" beginning May 1, 2005. Subsequent subparagraphs (C) - (J) would be moved to (D) - (K) to accommodate the new subparagraphs.

New §288.2(c) would require a public water supplier for municipal use to review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information.

Amended §288.3, Water Conservation Plans for Industrial or Mining Use, contains revisions to the rule that would apply to water conservation plans for industrial or mining use.

Amended §288.3(2) would specify that the current requirement for specification of conservation goals will remain in effect until May 1, 2005, to account for water conservation plans for industrial or mining uses that are prepared before the statutory deadline of May 1, 2005.

New §288.3(3) would add the requirement for industrial or mining water users to specify in their water conservation plans specific, quantified five-year and ten-year targets for water savings and the basis for the development of such goals beginning May 1, 2005. Subsequent paragraphs (3) - (6) would be renumbered as (4) - (7) to accommodate the new paragraph.

New §288.3(8) would require industrial or mining water users to review and update their water conservation plan, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information.

Amended §288.4, Water Conservation Plans for Agricultural Use, would contain the revisions to the rule that would apply to water conservation plans for agricultural use.

Amended §288.4(a)(1)(B) would state that the current requirement to specify conservation goals will remain in effect until May 1, 2005, to account for water conservation plans for agricultural uses that are prepared before the statutory deadline of May 1, 2005.

New §288.4(a)(1)(C) would add the requirement for an agricultural water user to specify in its water conservation plans specific, quantified five-year and ten-year targets for water savings and the basis for the development of such goals beginning May 1, 2005. Subsequent subparagraphs (C) - (F) would be moved to (D) - (F) to accommodate the new subparagraph.

Amended §288.4(a)(2)(D) would state that the current requirement to specify conservation goals will remain in effect until May 1, 2005, to account for water conservation plans for individual irrigation users that are prepared before the statutory deadline of May 1, 2005.

New §288.4(a)(2)(E) would add the requirement for individual irrigation users to specify in their water conservation plans specific, quantified five-year and ten-year targets for water savings, including, where appropriate, quantitative goals for irrigation water use efficiency and a pollution abatement and prevention plan beginning May 1, 2005. Subsequent subparagraphs (E) - (J) would be moved to (F) - (K) to accommodate the new subparagraph.

Amended §288.4(a)(3)(B) would state that the current requirement to specify conservation goals would remain in effect until May 1, 2005, to account for water conservation plans for systems providing agricultural water to more than one user that are prepared before the statutory deadline of May 1, 2005.

New §288.4(a)(3)(C) would add the requirement for systems providing agricultural water to more than one user to specify in their water conservation plans specific, quantified five-year and ten- year targets for water savings including maximum allowable losses for the storage and distribution system. Subsequent subparagraphs (C) - (J) would be moved to (D) - (K) to accommodate the new subparagraph.

New §288.4(c) would require agricultural water users to review and update their water conservation plan, as appropriate, at least every five years, based on an assessment of previous five- year and ten-year targets and any other new or updated information.

Amended Section 288.5, Water Conservation Plans for Wholesale Water Suppliers, contains revisions to the rule that would apply to water conservation plans for wholesale water suppliers.

Amended §288.5(1)(B) would specify that the current requirement for specification of conservation goals remain in effect until May 1, 2005, to account for water conservation plans of wholesale water suppliers that are prepared before the statutory deadline of May 1, 2005.

New §288.5(1)(C) would add the requirement that wholesale water suppliers specify in their water conservation plans, specific, quantified five-year and ten-year targets for water savings including, where appropriate, target goals for municipal use in gallons per capita per day for the wholesaler's service area, maximum acceptable unaccounted-for water, and the basis for the development of the goals beginning May 1, 2005. Subsequent subparagraphs (C) - (I) would be moved to (D) - (J) to accommodate the new subparagraph.

New §288.5(3) would require the wholesale water supplier to review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five- year and ten-year targets and any other new or updated information.

Subchapter B, Drought Contingency Plans

The commission proposes the amendments to this subchapter to implement House Bill 2663.

Amended §288.20, Drought Contingency Plans for Municipal Uses by Public Water Suppliers, contains revisions to the rule that would apply to drought contingency plans for municipal uses by public water suppliers.

New §288.20(a)(1)(F) would add the requirement that public water suppliers include in their drought contingency plans specific, quantified targets for water use reductions to be achieved during periods of water shortages or drought. New §288.20(a)(1)(F) would also add that the executive director, working with the executive administrator of the Texas Water Development Board, establish guidelines for drought contingency plans. Subsequent subparagraphs (F) - (I) would be moved to (G) - (J) to accommodate the new subparagraph.

Amended §288.21, Drought Contingency Plans for Irrigation Use, contains revisions to the rule that would apply to drought contingency plans for irrigation use.

New §288.21(a)(1)(D) would add the requirement that irrigation users include in their drought contingency plans specific, quantified targets for water use reductions to be achieved during periods of water shortages or drought. New §288.21(a)(1)(D) would also add that the executive director, working with the executive administrator of the Texas Water Development Board, establish guidelines for drought contingency plans. Subsequent subparagraphs (D) - (H) would be moved to (E) - (I) to accommodate the new subparagraph.

Amended §288.22, Drought Contingency Plans for Wholesale Water Suppliers, contains the revisions to the rule that would apply to drought contingency plans for wholesale water suppliers.

New §288.22(a)(6) would add the requirement that wholesale water suppliers include in their drought contingency plans specific and quantified targets for water use reductions to be achieved during periods of water shortages or drought. New §288.22(a)(6) would also add that the executive director, working with the executive administrator of the Texas Water Development Board, establish guidelines for drought contingency plans. Subsequent paragraphs (6) - (9) would be renumbered as (7) - (10) to accommodate the new paragraph.

Subchapter C, Required Submittals

The commission proposes the amendments to this subchapter to implement House Bill 2660 and House Bill 2663.

Amended §288.30, Required Submittals, contains the submittal requirements that would apply to both water conservation plans and drought contingency plans.

Amended §288.30(1) would change the water conservation plan submittal date to the executive director from no later than September 1, 1999, to no later than May 1, 2005, for the holder of an existing permit, certified filing, or certificate of adjudication for the appropriation of surface water in the amount of 1,000 acre-feet a year or more for municipal, industrial, and other non- irrigation uses. Amended §288.30(1) would also specify that after May 1, 2005, any revised water conservation plan submitted to the executive director within 90 days of adoption must include implementation reports listing the dates and descriptions of the conservation measures implemented.

Amended §288.30(2) would change the water conservation plan submittal date to the executive director from no later than September 1, 1999, to no later than May 1, 2005, for the holder of an existing permit, certified filing, or certificate of adjudication for the appropriation of surface water in the amount of 10,000 acre-feet a year or more for irrigation use. Amended §288.30(2) would also specify that after May 1, 2005, any revised water conservation plan submitted to the executive director within 90 days of adoption shall include implementation reports listing the dates and descriptions of the conservation measures implemented.

Amended §288.30(3)(A) would change the drought contingency plan submittal date to the executive director from no later than September 1, 1999, to no later than May 1, 2005, for retail public water suppliers that provide water service to 3,300 or more connections.

Amended §288.30(3)(B) would change the drought contingency plan preparation and adoption date and availability for inspection of all retail public water suppliers from no later than September 1, 1999, to no later than May 1, 2005.

Amended §288.30(4) would change the drought contingency plan submittal date to the executive director from no later than September 1, 1999, to no later than May 1, 2005, for all wholesale public water suppliers.

Amended §288.30(5) would change the drought contingency plan submittal date to the executive director from no later than September 1, 1999, to no later than May 1, 2005, for all irrigation districts.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jan Washburn, Program Specialist in the Federal Grants Management Section, determined that for the first five-year period the proposed amendments are in effect, there will be no significant fiscal implications for the agency or any other unit of state government. These amendments implement the legislative directive for specific, quantified five-year and ten-year targets for water usage reductions in the water conservation plans that certain water right holders already submit. Additionally, these amendments would require retail and wholesale water suppliers and irrigation districts to include quantified targets in their drought contingency plans for water use reductions during times of drought or water shortages.

The commission developed water conservation plan templates for agricultural, mining, and municipal users. Entities are not required to use these templates, but there are certain requirements for specific information to be submitted in whatever format the entity chooses. These entities, therefore, should have experience collecting data on historical usage and detailing measures for water conservation. The commission's data indicates that the majority of the approximately 300 plans currently submitted already include conservation activities and targets. These proposed rules would require specific, quantified five and ten-year goals for water conservation plans, with the requirement for five and ten-year intervals being new. Commission staff estimates that the plans currently being submitted have an average time frame of five years. Since most of the submitted plans already include water conservation targets and have an average time frame of five years, it is estimated that minimal effort will be involved in implementing specific, quantified five and ten-year targets. The estimated increase in workload ranges from five to ten hours, on average, for each of the approximately 300 entities required to submit a plan. For drought contingency plans, the proposed amendments require only specific, quantified targets for reductions.

The major difference between a water conservation plan and a drought contingency plan is that water conservation plans require specific, quantified five and ten-year targets and drought contingency plans require only a specific, quantified target with no specified time frame. The commission developed drought contingency plan templates for wholesale and retail water suppliers which already include target percentage reductions for water use at various stages of water shortages. These requirements affect approximately 1,300 entities, some of which are local governments. As many entities are already submitting targets in their drought contingency plans, it is estimated that the additional work involved as a result of these amendments will be minimal. Ms. Washburn determined that there will be no significant fiscal impact to units of local government as a result of these proposed rules.

PUBLIC BENEFITS AND COSTS

Ms. Washburn determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated from the proposed amendments are water conservation and improved planning to ensure water demands can be met. The proposed rules should further the reductions of water demand on public water supplies and the wastewater load on wastewater treatment plants, thus reducing or deferring capital infrastructure costs to local governments that provide water and wastewater services.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Ms. Washburn determined that there will be no significant fiscal implications to small or micro-businesses as a result of implementation of the proposed amendments for the first five years the proposed amendments are in effect. The amendments add one aspect to existing requirements for small and micro-businesses to prepare water conservation plans and/or drought contingency plans and those requirements are not anticipated to be significant. For the same reasons stated previously, it is estimated that minimal effort will be involved in implementing these specific, quantified targets for water conservation plans with an estimated increase in workload ranging from five to ten hours, on average, for each entity required to submit a plan. Additionally, for the same reasons state previously, it is estimated that small and micro-businesses will not incur significant increases in their work loads by including specific, quantified targets in their drought contingency plans. It is estimated that there will be no significant fiscal impact to small and micro-businesses to implement the proposed amendments.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the rulemaking is not subject to §2001.0225 because it does not meet the definition of a "major environmental rule" as defined in §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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state.

The proposed amendments have two specific goals. First, they would require that wholesale and retail public water suppliers, irrigation districts, and other entities include identifiable and quantifable target goals in their drought contingency plans. Second, the proposed amendments would require that all water conservation plans include specific, quantified five-year and ten-year targets for water conservation. The proposed amendments create new requirements for wholesale and retail public water suppliers, irrigation districts, and some water rights holders; however, the new requirements are insignificant and will not adversely affect 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. Therefore, the commission concludes the rule amendments do not constitute a major environmental rule.

Furthermore, even if the proposed rulemaking did meet the definition of a major environmental rule, the amendment is not subject to Texas Government Code, §2001.0225, because it does not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed amendments to Chapter 288 do not meet any of these requirements. First, there are no applicable federal standards that these rules would address. Second, the proposed rules do not exceed an express requirement of state law, rather they implement House Bill 2660 and House Bill 2663 from the 78th Legislature. Third, the amendments would not exceed a delegation agreement or contract between the state and an agency of the federal government. Fourth, the commission does not propose these rules under the general powers of the agency but rather under the authority of TWC, §11.1271, which mandates the commission require certain existing surface water right holders and future surface water right applicants to include specific and quantified five and ten-year targets for water savings within their water conservation plans by May 1, 2005, and TWC, §11.1272, which requires the commission and the Texas Water Development Board by joint rule to identify quantified target goals for drought contingency plans of wholesale and retail public water suppliers and irrigation districts by May 1, 2005. These rules are also proposed under TWC, §5.103, which provides the commission with the authority to adopt any rules necessary to carry out its powers and duties under the provisions of the TWC or other laws of this state. Therefore, the commission does not propose the adoption of the rules solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission's preliminary assessment indicates that Texas Government Code, Chapter 2007, does not apply to these proposed rule amendments because the proposed amendments are not a taking as defined in Chapter 2007, nor are they a constitutional taking of private real property. The specific purpose of the proposed amendments is twofold. First, they would require that wholesale and retail public water suppliers, irrigation districts, and other entities include specific, quantified target goals in their drought contingency plans. Second, the proposed amendments would require that all water conservation plans include specific, quantified five-year and ten-year targets for water conservation. Additionally, these proposed rules do not apply to private real property. These proposed rules only require certain existing surface water right holders and future surface water right applicants to include specific and quantified five and ten-year targets for water savings within their water conservation plans by May 1, 2005, and require the commission and the Texas Water Development Board by joint rule to identify quantified target goals for drought contingency plans of wholesale and retail public water suppliers and irrigation districts by May 1, 2005.

Promulgation and enforcement of these proposed rules will not affect private real property which is the subject of the rules because the proposed amendments will neither restrict or limit the owner's right to the property, nor cause a reduction of 25% or more in the market value of the property. The proposed rules only apply to requirements of drought contingency plans and water conservation plans. Property values will not be decreased, because the rule amendments will not limit the use of real property. Thus, these rules will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), relating to rules subject to the Coastal Management Program, and will, therefore, require that goals and policies of the Texas Coastal Management Program (CMP) be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that this rulemaking does not impact any CMP goal or policy. This rulemaking will change the submission date for water conservation plans and drought contingency plans from September 1, 1999 to May 1, 2005 and will establish a new requirement that entities subject to Chapter 288 must specify five-year and ten- year quantified targets for water savings in their water conservation plans. Additionally, this rulemaking will require that entities review and update their water conservation plans, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information. Finally, this rulemaking will require the entities subject to Chapter 288 to include in their drought contingency plan specific and quantified targets for water use reduction during periods of water shortages and drought.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-004-288-WT. Comments must be received by 5:00 p.m. on May 24, 2004. For further information, please contact Kathy Ramirez, Office of Environmental Policy, Analysis, and Assessment, (512) 239-6757.

Subchapter A. WATER CONSERVATION PLANS

30 TAC §§288.1 - 288.5

STATUTORY AUTHORITY

These amendments are proposed under Texas Water Code, §5.103, which provides the commission with the authority to adopt any rules necessary to carry out its powers and duties under the provisions of the Texas Water Code or other laws of this state; and Texas Water Code, §11.1271, which provides the commission with the authority to require applicants for a new or amended water right to adopt conservation measures; and Texas Government Code, §2001.006, which authorizes state agencies to adopt rules or take other administrative action that the agency deems necessary to implement legislation.

These proposed amendments implement Texas Water Code, §5.103 and §11.1271, and Texas Government Code, §2001.006.

§288.1.Definitions.

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

(1) Agricultural or Agriculture-- Any [ means any ] of the following activities:

(A) - (F) (No change.)

(2) - (10) (No change.)

(11) Municipal use in gallons per capita per day--The total average daily amount of water diverted or pumped for treatment for potable use by a public water supply system. The calculation is made by dividing the water diverted or pumped for treatment for potable use by population served.

(12) [ (11) ] Nursery grower--A person engaged in the practice of floriculture, viticulture, silviculture, and horticulture, including the cultivation of plants in containers or nonsoil media, who grows more than 50% of the products that the person either sells or leases, regardless of the variety sold, leased, or grown. For the purpose of this definition, grow means the actual cultivation or propagation of the product beyond the mere holding or maintaining of the item prior to sale or lease, and typically includes activities associated with the production or multiplying of stock such as the development of new plants from cuttings, grafts, plugs, or seedlings.

(13) [ (12) ] Pollution--The alteration of the physical, thermal, chemical, or biological quality of, or the contamination of, any water in the state that renders the water harmful, detrimental, or injurious to humans, animal life, vegetation, or property, or to the public health, safety, or welfare, or impairs the usefulness or the public enjoyment of the water for any lawful or reasonable purpose.

(14) [ (13) ] Public water supplier [ Water Supplier ]--An individual or entity that supplies water to the public for human consumption.

(15) [ (14) ] Regional water planning group [ Water Planning Group ]--A group established by the Texas Water Development Board to prepare a regional water plan under Texas Water Code, §16.053.

(16) [ (15) ] Retail public water supplier [ Public Water Supplier ]--An individual or entity that for compensation supplies water to the public for human consumption. The term does not include an individual or entity that supplies water to itself or its employees or tenants when that water is not resold to or used by others.

(17) [ (16) ] Reuse--The authorized use for one or more beneficial purposes of use of water that remains unconsumed after the water is used for the original purpose of use and before that water is either disposed of or discharged or otherwise allowed to flow into a watercourse, lake, or other body of state-owned water.

(18) [ (17) ] Water conservation plan--A strategy or combination of strategies for reducing the volume of water withdrawn from a water supply source, for reducing the loss or waste of water, for maintaining or improving the efficiency in the use of water, for increasing the recycling and reuse of water, and for preventing the pollution of water. A water conservation plan may be a separate document identified as such or may be contained within another water management document(s).

(19) [ (18) ] Wholesale public water supplier [ Public Water Supplier ]--An individual or entity that for compensation supplies water to another for resale to the public for human consumption. The term does not include an individual or entity that supplies water to itself or its employees or tenants as an incident of that employee service or tenancy when that water is not resold to or used by others, or an individual or entity that conveys water to another individual or entity, but does not own the right to the water which is conveyed, whether or not for a delivery fee.

§288.2.Water Conservation Plans for Municipal Uses by Public Water Suppliers.

(a) A water conservation plan for municipal water use by public water suppliers shall provide information, where applicable, in response to the following.

(1) Minimum requirements. All water conservation plans for municipal uses by public drinking water suppliers shall include the following elements:

(A) (No change.)

(B) until May 1, 2005, specification of conservation goals including, but not limited to, municipal per capita water use goals, the basis for the development of such goals, and a time frame for achieving the specified goals;

(C) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings to include goals for water loss programs and goals for municipal use, in gallons per capita per day;

(D) [ (C) ] metering device(s), within an accuracy of plus or minus 5.0% in order to measure and account for the amount of water diverted from the source of supply;

(E) [ (D) ] a program for universal metering of both customer and public uses of water, for meter testing and repair, and for periodic meter replacement;

(F) [ (E) ] measures to determine and control unaccounted-for uses of water (for example, periodic visual inspections along distribution lines; annual or monthly audit of the water system to determine illegal connections ; [ , ] abandoned services ; [ , ] etc.);

(G) [ (F) ] a program of continuing public education and information regarding water conservation;

(H) [ (G) ] a water rate structure which is not "promotional," i.e., a rate structure which is cost-based and which does not encourage the excessive use of water;

(I) [ (H) ] a reservoir systems operations plan, if applicable, providing for the coordinated operation of reservoirs owned by the applicant within a common watershed or river basin in order to optimize available water supplies; and

(J) [ (I) ] a means of implementation and enforcement which shall be evidenced by:

(i) a copy of the ordinance, resolution, or tariff [ , ] indicating official adoption of the water conservation plan by the water supplier; and

(ii) a description of the authority by which the water supplier will implement and enforce the conservation plan; and

(K) [ (J) ] documentation of coordination with the regional water planning groups [ Regional Water Planning Groups ] for the service area of the public water supplier in order to ensure [ insure ] consistency with the appropriate approved regional water plan [ plans ].

(2) Additional content requirements. Water conservation plans for municipal uses by public drinking water suppliers serving a current population of 5,000 or more and/or a projected population of 5,000 or more within the next ten years subsequent to the effective date of the plan shall include the following elements:

(A) (No change.)

(B) a record management system to record water pumped, water deliveries, water sales, and water losses which allows for the desegregation of water sales and uses into the following user classes:

(i) - (iii) (No change.)

(iv) industrial; [ and ]

(C) a requirement in every wholesale water supply contract entered into or renewed after official adoption of the plan (by either ordinance, resolution, or tariff), and including any contract extension, that each successive wholesale customer develop and implement a water conservation plan or water conservation measures using the applicable elements in this chapter . If [ ; if ] the customer intends to resell the water, [ then ] the contract between the initial supplier and customer must provide that the contract for the resale of the water must have water conservation requirements so that each successive customer in the resale of the water will be required to implement water conservation measures in accordance with the [ applicable ] provisions of this chapter.

(3) Additional conservation strategies. Any combination of the following strategies shall be selected by the water supplier, in addition to the minimum requirements in paragraphs (1) and (2) of this subsection, if they are necessary to achieve the stated water conservation goals of the plan. The commission may require that any of the following strategies be implemented by the water supplier if the commission determines that the strategy is necessary to achieve the goals of the water conservation plan:

(A) - (C) (No change.)

(D) reuse and/or recycling of wastewater and/or graywater [ greywater ];

(E) - (H) (No change.)

(b) A water conservation plan prepared in accordance with 31 TAC §363.15 (relating to Required Water Conservation Plan) of the Texas Water Development Board and substantially meeting the requirements of this section and other applicable commission rules may be submitted to meet application requirements in accordance with [ pursuant to ] a memorandum of understanding between the commission and the Texas Water Development Board.

(c) Beginning May 1, 2005, a public water supplier for municipal use shall review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information.

§288.3.Water Conservation Plans for Industrial or Mining Use.

(a) A water conservation plan for industrial or mining uses of water shall provide information, where applicable, in response to each of the following elements:

(1) a description of the use of the water in the production process, including how the water is diverted and transported from the source(s) of supply, how the water is utilized in the production process, and the estimated quantity of water consumed in the production process and therefore unavailable for reuse, discharge, or other means of disposal;

(2) until May 1, 2005, specification of conservation goals, the basis for the development of such goals, and a time frame for achieving the specified goals;

(3) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings and the basis for the development of such goals;

(4) [ (3) ] a description of the device(s) and/or method(s) within an accuracy of plus or minus 5.0% to be used in order to measure and account for the amount of water diverted from the source of supply;

(5) [ (4) ] leak-detection, repair, and accounting for water loss in the water distribution system;

(6) [ (5) ] application of state-of-the-art equipment and/or process modifications to improve water use efficiency; and

(7) [ (6) ] any other water conservation practice, method, or technique which the user shows to be appropriate for achieving the stated goal or goals of the water conservation plan.

(b) Beginning May 1, 2005, an industrial or mining water user shall review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information.

§288.4.Water Conservation Plans for Agricultural Use.

(a) A water conservation plan for agricultural use of water shall provide information, where applicable, in response to the following subsections.

(1) For an individual agricultural user other than irrigation:

(A) (No change.)

(B) until May 1, 2005, specification of conservation goals, the basis for the development of such goals, and a time frame for achieving the specified goals;

(C) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings and the basis for the development of such goals.

(D) [ (C) ] a description of the device(s) and/or method(s) within an accuracy of plus or minus 5.0% to be used in order to measure and account for the amount of water diverted from the source of supply;

(E) [ (D) ] leak-detection, repair, and accounting for water loss in the water distribution system;

(F) [ (E) ] application of state-of-the-art equipment and/or process modifications to improve water use efficiency; and

(G) [ (F) ] any other water conservation practice, method, or technique which the user shows to be appropriate for achieving the stated goal or goals of the water conservation plan.

(2) For an individual irrigation user:

(A) - (C) (No change.)

(D) until May 1, 2005, specification of conservation goals including, where appropriate, quantitative goals for irrigation water use efficiency and a pollution abatement and prevention plan;

(E) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings including, where appropriate, quantitative goals for irrigation water use efficiency and a pollution abatement and prevention plan;

(F) [ (E) ] water-conserving irrigation equipment and application system or method including, but not limited to, surge irrigation, low pressure sprinkler, drip irrigation, and nonleaking pipe;

(G) [ (F) ] leak-detection, repair, and water-loss control;

(H) [ (G) ] scheduling the timing and/or measuring the amount of water applied (for example, soil moisture monitoring);

(I) [ (H) ] land improvements for retaining or reducing runoff, and increasing the infiltration of rain and irrigation water including, but not limited to, land leveling, furrow diking, terracing, and weed control;

(J) [ (I) ] tailwater recovery and reuse; and

(K) [ (J) ] any other water conservation practice, method, or technique which the user shows to be appropriate for preventing waste and achieving conservation.

(3) For a system providing agricultural water to more than one user:

(A) (No change.)

(B) until May 1, 2005, specification of water conservation goals, including maximum allowable losses for the storage and distribution system;

(C) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings including maximum allowable losses for the storage and distribution system;

(D) [ (C) ] a description of the practice(s) and/or device(s) which will be utilized to measure and account for the amount of water diverted from the source(s) of supply;

(E) [ (D) ] a monitoring and record management program of water deliveries, sales, and losses;

(F) [ (E) ] a leak-detection, repair, and water loss control program;

(G) [ (F) ] a program to assist customers in the development of on-farm water conservation and pollution prevention plans and/or measures;

(H) [ (G) ] a requirement in every wholesale water supply contract entered into or renewed after official adoption of the plan (by either ordinance, resolution, or tariff), and including any contract extension, that each successive wholesale customer develop and implement a water conservation plan or water conservation measures using the applicable elements in this chapter . If [ ; if ] the customer intends to resell the water, [ then ] the contract between the initial supplier and customer must provide that the contract for the resale of the water must have water conservation requirements so that each successive customer in the resale of the water will be required to implement water conservation measures in accordance with applicable provisions of this chapter;

(I) [ (H) ] official adoption of the water conservation plan and goals, by ordinance, rule, resolution, or tariff, indicating that the plan reflects official policy of the supplier;

(J) [ (I) ] any other water conservation practice, method, or technique which the supplier shows to be appropriate for achieving conservation; and

(K) [ (J) ] documentation of coordination with the regional water planning groups [ Regional Water Planning Groups ] in order to ensure [ insure ] consistency with [ the ] appropriate approved regional water plans.

(b) A water conservation plan prepared in accordance with the rules of the United States Department of Agriculture Natural Resource Conservation Service, the State Soil and Water Conservation Board, or other federal or state agency and substantially meeting the requirements of this section and other applicable commission rules may be submitted to meet application requirements in accordance with [ pursuant to ] a memorandum of understanding between the commission and that agency.

(c) Beginning May 1, 2005, an agricultural water user shall review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five- year and ten-year targets and any other new or updated information.

§288.5.Water Conservation Plans for Wholesale Water Suppliers.

A water conservation plan for a wholesale water supplier shall provide information, where applicable, in response to each of the following paragraphs.

(1) Minimum requirements. All water conservation plans for wholesale water suppliers shall include the following elements:

(A) (No change.)

(B) until May 1, 2005, specification of conservation goals including, where appropriate, target per capita water use goals for the wholesaler's service area, maximum acceptable unaccounted- for water, the basis for the development of these [ said ] goals, and a time frame for achieving these [ those ] goals;

(C) beginning May 1, 2005, specific, quantified five-year and ten-year targets for water savings including, where appropriate, target goals for municipal use in gallons per capita per day for the wholesaler's service area, maximum acceptable unaccounted-for water, and the basis for the development of these goals.

(D) [ (C) ] a description as to which practice(s) and/or device(s) will be utilized to measure and account for the amount of water diverted from the source(s) of supply;

(E) [ (D) ] a monitoring and record management program for determining water deliveries, sales, and losses;

(F) [ (E) ] a program of metering and leak detection and repair for the wholesaler's water storage, delivery, and distribution system;

(G) [ (F) ] a requirement in every water supply contract entered into or renewed after official adoption of the water conservation plan, and including any contract extension, that each successive wholesale customer develop and implement a water conservation plan or water conservation measures using the applicable elements of this chapter. If the customer intends to resell the water, then the contract between the initial supplier and customer must provide that the contract for the resale of the water must have water conservation requirements so that each successive customer in the resale of the water will be required to implement water conservation measures in accordance with applicable provisions of this chapter;

(H) [ (G) ] a reservoir systems operations plan, if applicable, providing for the coordinated operation of reservoirs owned by the applicant within a common watershed or river basin. The reservoir systems operations plans shall include optimization of water supplies as one of the significant goals of the plan;

(I) [ (H) ] a means for implementation and enforcement, which shall be evidenced by [ : ] a copy of the ordinance, rule, resolution, or tariff, indicating official adoption of the water conservation plan by the water supplier; and a description of the authority by which the water supplier will implement and enforce the conservation plan; and

(J) [ (I) ] documentation of coordination with the regional water planning groups [ Regional Water Planning Groups ] for the service area of the wholesale water supplier in order to ensure [ insure ] consistency with the appropriate approved regional water plans.

(2) Additional conservation strategies. Any combination of the following strategies shall be selected by the water wholesaler, in addition to the minimum requirements of paragraph (1) of this section, if they are necessary in order to achieve the stated water conservation goals of the plan. The commission may require by commission order that any of the following strategies be implemented by the water supplier if the commission determines that the strategies are necessary in order for the conservation plan to be achieved:

(A) - (B) (No change.)

(C) a program for reuse and/or recycling of wastewater and/or graywater [ greywater ]; and

(D) (No change.)

(3) Review and update requirements. Beginning May 1, 2005, the wholesale water supplier shall review and update its water conservation plan, as appropriate, at least every five years, based on an assessment of previous five-year and ten-year targets and any other new or updated information.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402383

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Subchapter B. DROUGHT CONTINGENCY PLANS

30 TAC §§288.20 - 288.22

STATUTORY AUTHORITY

The amendments are proposed under Texas Water Code, §5.103, which provides the commission with the authority to adopt any rules necessary to carry out its powers and duties under the provisions of the Texas Water Code or other laws of this state; and Texas Water Code, §11.1272, which provides the commission with the authority to require wholesale and retail public water suppliers and irrigation districts to develop drought contingency plans; and Texas Government Code, §2001.006, which authorizes state agencies to adopt rules or take other administrative action that the agency deems necessary to implement legislation.

The proposed amendments implement Texas Water Code, §5.103 and §11.1272, and Texas Government Code, §2001.006.

§288.20.Drought Contingency Plans for Municipal Uses by Public Water Suppliers.

(a) A drought contingency plan for a retail public water supplier, where applicable, shall provide information in response to each of the following.

(1) Minimum requirements. Drought contingency plans shall include the following minimum elements.

(A) - (B) (No change.)

(C) The drought contingency plan must document coordination with the regional water planning groups [ Regional Water Planning Groups ] for the service area of the retail public water supplier to ensure [ insure ] consistency with the appropriate approved regional water plans.

(D) - (E) (No change.)

(F) The drought contingency plan must include specific, quantified targets for water use reductions to be achieved during periods of water shortage and drought. The entity preparing the plan shall establish the targets. The executive director, working with the executive administrator of the Texas Water Development Board, will establish guidelines for drought contingency plans.

(G) [ (F) ] The drought contingency plan must include the specific water supply or water demand management measures to be implemented during each stage of the plan including, but not limited to, the following:

(i) curtailment of non-essential water uses; and

(ii) utilization of alternative water sources and/or alternative delivery mechanisms with the prior approval of the executive director as appropriate (e.g., interconnection with another water system, temporary use of a non-municipal water supply, use of reclaimed water for non-potable purposes, etc.).

(H) [ (G) ] The drought contingency plan must include the procedures to be followed for the initiation or termination of each drought response stage, including procedures for notification of the public.

(I) [ (H) ] The drought contingency plan must include procedures for granting variances to the plan.

(J) [ (I) ] The drought contingency plan must include procedures for the enforcement of [ any ] mandatory water use restrictions, including specification of penalties (e.g., fines, water rate surcharges, discontinuation of service) for violations of such restrictions.

(2) Privately-owned water utilities. Privately-owned water utilities shall prepare a drought contingency plan in accordance with this section and [ shall ] incorporate such plan into their tariff.

(3) Wholesale water customers. Any water supplier that receives all or a portion of its water supply from another water supplier shall consult with that supplier and shall include in the drought contingency plan appropriate provisions for responding to reductions in that water supply.

(b) - (c) (No change.)

§288.21.Drought Contingency Plans for Irrigation Use.

(a) A drought contingency plan for an irrigation use, where applicable, shall provide information in response to each of the following.

(1) Minimum requirements. Drought contingency plans for irrigation water suppliers shall include policies and procedures for the equitable and efficient allocation of water on a pro rata basis during times of shortage in accordance with Texas Water Code, §11.039. Such plans shall include the following elements as a minimum.

(A) (No change.)

(B) The drought contingency plan must document coordination with the regional water planning groups [ Regional Water Planning Groups ] to ensure [ insure ] consistency with the appropriate approved regional water plans.

(C) (No change.)

(D) The drought contingency plan must include specific, quantified targets for water use reductions to be achieved during periods of water shortage and drought. The entity preparing the plan shall establish the targets. The executive director, working with the executive administrator of the Texas Water Development Board, will establish guidelines for drought contingency plans.

(E) [ (D) ] The drought contingency plan shall include methods for determining the allocation of irrigation supplies to individual users.

(F) [ (E) ] The drought contingency plan must [ shall ] include a description of the information to be monitored by the water supplier and the procedures to be followed for the initiation or termination of water allocation policies.

(G) [ (F) ] The drought contingency plan must [ shall ] include procedures for use accounting during the implementation of water allocation policies.

(H) [ (G) ] The drought contingency plan must [ shall ] include policies and procedures, if any, for the transfer of water allocations among individual users within the water supply system or to users outside the water supply system.

(I) [ (H) ] The drought contingency plan must [ shall ] include procedures for the enforcement of water allocation policies, including specification of penalties for violations of such policies and for wasteful or excessive use of water.

(2) Wholesale water customers. Any irrigation water supplier that receives all or a portion of its water supply from another water supplier shall consult with that supplier and shall include in the drought contingency plan , appropriate provisions for responding to reductions in that water supply.

(3) Protection of public water supplies. Any irrigation water supplier that also provides or delivers water to a public water supplier(s) shall consult with that public water supplier(s) and shall include in the plan , mutually agreeable and appropriate provisions to ensure an uninterrupted supply of water necessary for essential uses relating to public health and safety. Nothing in this provision shall be construed as requiring the irrigation water supplier to transfer irrigation water supplies to non-irrigation use on a compulsory basis or without just compensation.

(b) (No change.)

§288.22.Drought Contingency Plans for Wholesale Water Suppliers.

(a) A drought contingency plan for a wholesale water supplier shall include the following minimum elements.

(1) (No change.)

(2) The drought contingency plan must document coordination with the regional water planning groups [ Regional Water Planning Groups ] for the service area of the wholesale public water supplier to ensure [ insure ] consistency with the appropriate approved regional water plans.

(3) The drought contingency plan must [ shall ] include a description of the information to be monitored by the water supplier and specific criteria for the initiation and termination of drought response stages, accompanied by an explanation of the rationale or basis for such triggering criteria.

(4) The drought contingency plan must [ shall ] include a minimum of three drought or emergency response stages providing for the implementation of measures in response to water supply conditions during a repeat of the drought-of-record.

(5) The drought contingency plan must [ shall ] include the procedures to be followed for the initiation or termination of drought response stages, including procedures for notification of wholesale customers regarding the initiation or termination of drought response stages.

(6) The drought contingency plan must include specific, quantified targets for water use reductions to be achieved during periods of water shortage and drought. The entity preparing the plan shall establish the targets. The executive director, working with the executive administrator of the Texas Water Development Board, will establish guidelines for drought contingency plans.

(7) [ (6) ] The drought contingency plan must [ shall ] include the specific water supply or water demand management measures to be implemented during each stage of the plan including, but not limited to, the following:

(A) pro rata curtailment of water deliveries to or diversions by wholesale water customers as provided in Texas Water Code, §11.039; and

(B) utilization of alternative water sources with the prior approval of the executive director as appropriate (e.g., interconnection with another water system, temporary use of a non-municipal water supply, use of reclaimed water for non-potable purposes, etc.).

(8) [ (7) ] The drought contingency plan must [ shall ] include a provision in every wholesale water contract entered into or renewed after adoption of the plan, including contract extensions, that in case of a shortage of water resulting from drought, the water to be distributed shall be divided in accordance with Texas Water Code, §11.039.

(9) [ (8) ] The drought contingency plan must [ shall ] include procedures for granting variances to the plan.

(10) [ (9) ] The drought contingency plan must [ shall ] include procedures for the enforcement of any mandatory water use restrictions including specification of penalties (e.g., liquidated damages, water rate surcharges, discontinuation of service) for violations of such restrictions.

(b) - (c) (No change.)

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402384

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Subchapter C. REQUIRED SUBMITTALS

30 TAC §288.30

STATUTORY AUTHORITY

The amendment is proposed under Texas Water Code, §5.103, which provides the commission with the authority to adopt any rules necessary to carry out its powers and duties under the provisions of the Texas Water Code or other laws of this state; and Texas Water Code, §11.1271, which provides the commission with the authority to require applicants for a new or amended water right to adopt conservation measures; and Texas Water Code, §11.1272, which provides the commission with the authority to require wholesale and retail public water suppliers and irrigation districts to develop drought contingency plans; and Texas Government Code, §2001.006, which authorizes state agencies to adopt rules or take other administrative action that the agency deems necessary to implement legislation.

The proposed amendment implements Texas Water Code, §5.103, §11.1271, and §11.1272, and Texas Government Code, §2001.006.

§288.30.Required Submittals.

In addition to the water conservation and drought contingency plans required to be submitted with an application under §295.9 of this title (relating to Water Conservation and Drought Contingency Plans), water conservation and drought contingency plans are required as follows.

(1) Water conservation plans for municipal, industrial, and other non-irrigation uses . The holder of an existing permit, certified filing, or certificate of adjudication for the appropriation of surface water in the amount of 1,000 acre-feet a year or more for municipal, industrial, and other non- irrigation uses shall develop, submit, and implement a water conservation plan meeting the requirements of Subchapter A of this chapter (relating to Water Conservation Plans). The water conservation plan must [ shall ] be submitted to the executive director not later than May 1, 2005 [ September 1, 1999 ]. Thereafter, any revised plans must be submitted to the executive director within 90 days of adoption. The revised plans must include implementation reports listing the dates and descriptions of the conservation measures implemented. The requirement for a water conservation plan under this rule must [ shall ] not result in the need for an amendment to an existing permit, certified filing, or certificate of adjudication.

(2) Water conservation plans for irrigation uses . The holder of an existing permit, certified filing, or certificate of adjudication for the appropriation of surface water in the amount of 10,000 acre-feet a year or more for irrigation uses shall develop, submit, and implement a water conservation plan meeting the requirements of Subchapter A of this chapter. The water conservation plan must [ shall ] be submitted to the executive director not later than May 1, 2005 [ September 1, 1999 ]. Thereafter, any revised plans must be submitted to the executive director within 90 days of adoption. The revised plans must include implementation reports listing the dates and descriptions of the conservation measures implemented. The requirement for a water conservation plan under this rule must [ shall ] not result in the need for an amendment to an existing permit, certified filing, or certificate of adjudication.

(3) Drought contingency plans for retail public water suppliers. Retail public water suppliers shall submit a drought contingency plan meeting the requirements of Subchapter B of this chapter (relating to Drought Contingency Plans) to the executive director after adoption by its governing body. The retail public water system shall provide a copy of the plan to the regional water planning group [ Regional Water Planning Group ] for each region within which the water system operates. These drought contingency plans must [ shall ] be submitted as follows.

(A) For retail public water suppliers providing water service to 3,300 or more connections, the drought contingency plan must [ shall ] be submitted to the executive director not later than May 1, 2005 [ September 1, 1999 ]. Thereafter, any revised plans must [ shall ] be submitted to the executive director within 90 days of adoption by the community water system. Any new retail public water suppliers providing water service to 3,300 or more connections shall prepare and adopt a drought contingency plan within 180 days of commencement of operation, and submit the plan to the executive director within 90 days of adoption.

(B) For all the retail public water suppliers, the drought contingency plan must [ shall ] be prepared and adopted not later than May 1, 2005 [ September 1, 2000 ] and must [ shall ] be available for inspection by the executive director upon request. Thereafter, any new retail public water supplier providing water service to less than 3,300 connections shall prepare and adopt a drought contingency plan within 180 days of commencement of operation, and shall make the plan available for inspection by the executive director upon request.

(4) Drought contingency plans for wholesale public water suppliers. Wholesale public water suppliers shall submit a drought contingency plan meeting the requirements of Subchapter B of this chapter to the executive director not later than May 1, 2005 [ September 1, 1999 ], after adoption of the drought contingency plan by the governing body of the water supplier. Thereafter, any new or revised plans must [ shall ] be submitted to the executive director within 90 days of adoption by the governing body of the wholesale public water supplier. Wholesale public water suppliers shall also provide a copy of the drought contingency plan to the regional water planning group [ Regional Water Planning Group ] for each region within which the wholesale water supplier operates.

(5) Drought contingency plans for irrigation districts. Irrigation districts shall submit a drought contingency plan meeting the requirements of Subchapter B of this chapter to the executive director not later than May 1, 2005 [ September 1, 1999 ], after adoption by the governing body of the irrigation district. Thereafter, any new or revised plans must [ shall ] be submitted to the executive director within 90 days of adoption by the governing body of the irrigation district. Irrigation districts shall also provide a copy of the plan to the regional water planning group [ Regional Water Planning Group ] for each region within which the irrigation district operates.

(6) Other submissions. A water conservation plan or drought contingency plan required to be submitted with an application in accordance with §295.9 of this title must [ (relating to Water Conservation and Drought Contingency Plans) shall ] also be subject to review and approval by the commission.

(7) Existing permits. The holder of an existing permit, certified filing, or certificate of adjudication shall not be subject to enforcement actions nor shall the permit, certified filing, or certificate of adjudication be subject to cancellation, either in part or in whole, based on the nonattainment [ non-attainment ] of goals contained within a water conservation plan submitted with an application in accordance with §295.9 of this title or by the holder of an existing permit, certified filing, or certificate of adjudication in accordance with the requirements of this section.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402385

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Chapter 328. WASTE MINIMIZATION AND RECYCLING

Subchapter A. PURPOSE AND GENERAL INFORMATION

30 TAC §328.4, §328.5

The Texas Commission on Environmental Quality (commission) proposes amendments to §328.4 and §328.5.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

This rulemaking implements the requirements of House Bill 1823, 78th Legislature, 2003, which amends Texas Health and Safety Code (THSC), §361.119, to require that owners and operators of recycling facilities, including composting or mulching facilities, have sufficient financial assurance in place. The financial assurance must be conditioned on satisfactorily operating and closing the facility, consistent with the requirements of THSC, §361.085, for a solid waste facility other than a facility for the disposal of hazardous waste. House Bill 1823 applies to an owner or operator of a recycling facility at which combustible material is stored outdoors or that poses a significant risk to public health and safety as determined by the commission. The legislation also exempts a facility that is owned, operated, or affiliated with a person who has a permit to dispose of municipal solid waste from rules adopted under this section of law.

Corresponding rulemakings published in this issue of the Texas Register include changes to 30 TAC Chapter 37, Financial Assurance; Chapter 330, Municipal Solid Waste; Chapter 332, Composting; and Chapter 335, Industrial Solid Waste and Municipal Hazardous Waste.

SECTION BY SECTION DISCUSSION

Administrative and grammatical changes are proposed throughout the sections to be consistent with Texas Register requirements and to improve readability. As appropriate, subsections have been relettered to accommodate new language.

Proposed amended §328.4, Limitations on Storage of Recyclable Materials, adds, in new subsection (a)(4), an exemption from material storage limitations for the owner or operator of a facility that owns or operates a recycling facility permitted to dispose of municipal solid waste, or is affiliated with a person holding a permit to dispose of municipal solid waste.

Proposed amended §328.5, Reporting and Recordkeeping Requirements, requires, in new subsection (c), the owner or operator of an affected facility to submit a detailed written cost estimate for closure of the facility. In order to ensure that financial assurance will cover closure costs for a facility, this estimate must be based on the collection, transportation, and disposal of processed and unprocessed materials in cubic yards and/or short ton measure by a third party not owned or affiliated with the recycling facility.

Proposed amended §328.5, establishes, in new subsection (d), the actual financial assurance requirement for owners or operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety. The subsection also refers affected entities to Chapter 37, Subchapter J for specific financial assurance requirements for recycling facilities.

Proposed amended §328.5 describes, in new subsection (e), requirements for closure of affected recycling facilities. This subsection defines closure to include the collection, transportation, and disposition of processed and unprocessed materials. The deadline for closure is set at 180 days following the most recent acceptance of material unless otherwise approved or directed by the executive director.

Proposed amended §328.5, adds, in new subsection (f)(3), a requirement for the owner or operator of a facility subject to the requirements of this subchapter to maintain records necessary to show proof of financial assurance sufficient to cover all closure costs.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jeffrey Horvath, Analyst, Strategic Planning and Grants Management, determined that for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency as a result of the administration or enforcement of the proposed rules. No fiscal implications are anticipated for other units of state or local government as a result of the proposed rules.

The proposed amendments implement House Bill 1823. The proposed amendments require owners or operators of recycling facilities that store combustible material outdoors or recycling facilities that pose a significant risk to public health and safety to have sufficient financial assurance to properly operate and close the facility. The proposed amendments do not apply to a facility that is owned or operated by, or affiliated with a person who has a permit to dispose of municipal solid waste or to facilities owned or operated by local governments, affiliates of metal smelters, or facilities that accept no financial compensation to accept materials.

The agency estimates that there are approximately 206 composting, recycling, and industrial recycling facilities that may store combustible materials and otherwise be subject to the proposed rules. Under the proposed amendments, owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. The agency's Waste Permits Division would need to evaluate closure cost estimates submitted by the facilities, and the agency's Financial Administration Division would need to review and monitor financial assurance mechanisms obtained by the facilities. These operational impacts are expected to have fiscal implications for the agency, though they are not anticipated to be significant.

PUBLIC BENEFITS AND COSTS

Mr. Horvath also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the enforcement of and compliance with the proposed rules will be compliance with state law. Financial assurance for recycling facilities may also provide financial support in some cases to local governments if they are ever faced with the costs of closing one of the affected facilities.

Fiscal implications, which may be significant, are anticipated for businesses and individuals affected by the proposed amendments.

Owners and operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety would need to obtain sufficient financial assurance to cover the costs of properly closing the facility. Owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. These closure cost estimates would be submitted for approval to the agency. Except for facilities that have a tangible net worth of at least $10 million and meet other financial qualifications to self-insure, affected facilities will incur an annual cost to obtain a financial assurance mechanism. Financial assurance costs will vary depending upon the specific facility, as well as the financial strength and size of the owner/operator. If affected owners and operators do not meet the qualifications of the financial test, they could obtain financial assurance in the form of a surety bond, letter of credit, trust, or the purchase of an insurance policy. These costs are estimated to range between 1% and 5% per year of the cost of closing the facility.

Costs to properly close most composting, mulching, and affected recycling facilities are estimated to range between $20,000 and $200,000 depending upon the amount and type of material that would need to be disposed of, and the method of disposal. A few larger facilities may require up to $2 million to properly dispose of their wastes, while some smaller facilities may require less than $20,000. For the purposes of this fiscal note, it is assumed that for the estimated 206 affected facilities, most of them would incur costs of between $20,000 and $200,000 to properly close their site. Further, the cost to obtain proper financial assurance is estimated to be 5% of the closure costs, and is therefore estimated to be between $1,000 and $10,000 per year for each of the estimated 206 affected facilities. Total costs for all owners and operators are roughly estimated to be as low as $206,000 and as high as $2.06 million each year for the five-year period covered by the fiscal note.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Adverse fiscal implications are anticipated as a result of implementation of the proposed rules for small or micro-businesses. It is not known how many of the estimated 206 affected facilities are small or micro-businesses, but it is likely that most of these facilities would meet the criteria.

The following is an analysis of the potential costs per employee for small or micro-businesses affected by the proposed amendments. Small and micro-businesses are defined as having fewer than 100 or 20 employees, respectively. A small business that purchases a financial assurance mechanism could incur additional costs of between $1,000 to $10,000 per year or between $10.00 and $100 per employee. A micro-business that purchases financial assurance could incur additional costs of between $50 and $500 per employee.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rules in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rules are not subject to §2001.0225 because they do not meet the criteria for a "major environmental rule" as defined in that statute.

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, 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 specific intent of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. Therefore, it is not anticipated that the proposed rules will 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 commission concludes that these proposed rules do not meet the definition of a major environmental rule.

Furthermore, even if the proposed rules did meet the definition of a major environmental rule, the proposed rules are not subject to Texas Government Code, §2001.0225, because they do not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed rules do not meet any of these requirements. First, there are no applicable federal standards that these rules would address. Second, the proposed rules do not exceed an express requirement of state law, but instead implement the statutory requirement of THSC, §361.119. Third, there is no delegation agreement that would be exceeded by these proposed rules because none relate to this subject matter. Fourth, the commission proposes these rules under the rulemaking direction of House Bill 1823, amending THSC, §361.119, and not solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed an assessment of whether the proposed rules constitute a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. The proposed rules would substantially advance this stated purpose by requiring that regulated facilities obtain adequate financial assurance to properly close a facility.

Promulgation and enforcement of these proposed rules would be neither a statutory nor a constitutional taking of private real property because the proposed rules do not affect real property.

In particular, there are no burdens imposed on private real property, and the proposed rules would improve the commission's ability to ensure proper closure of certain recycling facilities. Because the regulation does not affect real property, it does not burden, restrict, or limit an owner's right to property or reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. Therefore, these proposed rules will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), relating to rules subject to the Texas Coastal Management Program (CMP), and therefore, requires that goals and policies of the CMP be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed rulemaking is consistent with CMP goals and policies because the rulemaking is an administrative action that requires financial mechanisms to pay for closure activities; will not have direct or significant adverse effect on any coastal natural resource areas; will not have a substantive effect on commission actions subject to the CMP; and promulgation and enforcement of the proposed rules will not violate (exceed) any standards identified in the applicable CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

ANNOUNCEMENT OF HEARING

The commission will hold a public hearing on this proposal in Austin on May 20, 2004 at 10:00 a.m. in Building F, Room 2210, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes before the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-002-037-AD. Comments must be received by 5:00 p.m., May 24, 2004. For further information or questions concerning this proposal, please contact Debi Dyer, Policy and Regulations Division, at (512) 239-3972.

STATUTORY AUTHORITY

The amendments are proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendments implement House Bill 1823.

§328.4.Limitations on Storage of Recyclable Materials.

(a) The provisions of subsections (e) and (f) of this section are available to all recycling facilities. In order to be exempt from the registration and permit requirements under §330.4(f)(1)(B) of this title (relating to Permit Required) or under Chapter 332 of this title (relating to Composting), a facility must comply with the requirements of this section unless:

(1) - (2) (No change.)

(3) the facility smelts recyclable metals or the facility is a secondary metals recycling facility affiliated with a smelter of recyclable metals, including the operations conducted and materials handled at the facility, provided that the owner or operator of the facility demonstrates that:

(A) (No change.)

(B) all the solid waste generated from processing the materials is disposed of in a solid waste facility authorized under Texas Health and Safety Code, Chapter 361 ( concerning [ relating to ] the Solid Waste Disposal Act), with the exception of small amounts of solid waste that may be inadvertently and unintentionally disposed of in another manner ; [ . ]

(4) the facility is owned or operated by, or affiliated with, a person who holds a permit to dispose of municipal solid waste.

(b) - (f) (No change.)

§328.5.Reporting and Recordkeeping Requirements.

(a) In order to be exempt from the registration and permit requirements under §330.4(f)(1)(B) of this title (relating to Permit Required) or under Chapter 332 of this title (relating to Composting), a facility must comply with the requirements of this section unless:

(1) - (2) (No change.)

(3) the facility smelts recyclable metals or the facility is a secondary metals recycling facility affiliated with a smelter of recyclable metals, including the operations conducted and materials handled at the facility, provided that the owner or operator of the facility demonstrates that:

(A) (No change.)

(B) all the solid waste generated from processing the materials is disposed of in a solid waste facility authorized under Texas Health and Safety Code, Chapter 361 ( concerning [ relating to ] the Solid Waste Disposal Act), with the exception of small amounts of solid waste that may be inadvertently and unintentionally disposed of in another manner; or

(4) (No change.)

(b) Within 90 days of the effective date of this section or prior to the commencement of new operations, the owner or operator of a facility that serves as a collection and processing point for only non-putrescible source-separated recyclable materials, or for mulching or composting of only source-separated recyclable material shall report on a form or forms to be provided by the executive director, describing:

(1) - (3) (No change.)

(4) any updates [ Subsequent reports shall be submitted to update ] or changes to [ change any ] information contained in the facility report within 90 days of the effective date of the change.

(c) Closure cost estimates.

(1) An owner or operator of a recycling facility that stores combustible material outdoors, or that poses a significant risk to public health and safety as determined by the executive director, shall provide a detailed written cost estimate, in current dollars, showing the cost of hiring a third party to close the facility in accordance with the requirements of this section.

(2) The estimate must:

(A) equal the costs of closure of the facility, including disposal of the maximum inventories of all processed and unprocessed materials on-site during the life of the facility;

(B) be based on the costs of hiring a third party that is not affiliated (as defined in §328.2 of this title (relating to Definitions)) with the owner or operator; and

(C) be based on a per cubic yard and/or short ton measure for collection and disposal costs.

(d) Financial assurance. An owner or operator of a recycling facility that stores combustible material outdoors, or that poses a significant risk to public health and safety as determined by the executive director shall establish and maintain financial assurance for closure of the facility in accordance with Chapter 37, Subchapter J of this title (relating to Financial Assurance for Recycling Facilities).

(e) Closure requirements.

(1) Closure must include collecting processed and unprocessed materials, and transporting the materials to an authorized facility for disposition unless otherwise directed or approved in writing by the executive director.

(2) Closure of the facility must be completed within 180 days following the most recent acceptance of processed or unprocessed materials unless otherwise directed or approved in writing by the executive director.

(f) [ (c) ] The owner or operator of a facility subject to the requirements of this subchapter shall maintain all records necessary to show:

(1) compliance with the requirements of §328.4 of this title (relating to Limitations on Storage of Recyclable Materials); and

(2) reasonable efforts to maintain source-separation of materials received by the facility, including:

(A) notice to customers of source-separation requirements ; [ , ]

(B) training of staff in the inspection of incoming loads to ensure that they contain no more than 10% incidental non-recyclable waste ; [ , ]

(C) documentation of loads that have been rejected for exceeding 10% incidental non-recyclable waste ; [ , ] and

(D) documentation that incidental non-recyclable waste constitutes no more than 5% of the average total scale weight or volume of all materials received in the last six-month period ; [ . ]

(3) proof of financial assurance sufficient to cover all closure costs.

(g) [ (d) ] The owner or operator of a facility subject to the requirements of this section shall make these records available upon request to agents or employees of the executive director or of local governments with territorial or extra-territorial jurisdiction over the property on which the facility is located.

(h) [ (e) ] The owner or operator of a facility subject to the requirements of this section that manages combustible materials shall have a fire prevention and suppression plan that shall be made available to the local fire prevention authority having jurisdiction over the facility for review and coordination.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402388

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Chapter 330. MUNICIPAL SOLID WASTE

The Texas Commission on Environmental Quality (commission) proposes amendments to §330.3 and §330.280. The commission also proposes to repeal §330.282 and simultaneously proposes new §330.282.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

This rulemaking implements the requirements of House Bill 1823, 78th Legislature, 2003, which amends Texas Health and Safety Code (THSC), §361.119, to require that owners and operators of recycling facilities, including composting or mulching facilities, have sufficient financial assurance in place. The financial assurance must be conditioned on satisfactorily operating and closing the facility, consistent with the requirements of THSC, §361.085, for a solid waste facility other than a facility for the disposal of hazardous waste. House Bill 1823 applies to an owner or operator of a recycling facility at which combustible material is stored outdoors or that poses a significant risk to public health and safety as determined by the commission. The legislation also exempts a facility that is owned, operated, or affiliated with a person who has a permit to dispose of municipal solid waste from rules adopted under this section of law.

Corresponding rulemakings published in this issue of the Texas Register include changes to 30 TAC Chapter 37, Financial Assurance; Chapter 328, Waste Minimization and Recycling; Chapter 332, Composting; and Chapter 335, Industrial Solid Waste and Municipal Hazardous Waste.

SECTION BY SECTION DISCUSSION

Administrative and grammatical changes are proposed throughout the sections to be consistent with Texas Register requirements and to improve readability.

Proposed amended §330.3, Applicability, outlines in subsection (h) the House Bill 1823 requirements that owners and operators of recycling facilities that store combustible materials outdoors, or that pose significant risk to public health and safety as determined by the executive director, are required to demonstrate financial assurance.

Proposed amended §330.280, Applicability, adds financial assurance requirements to municipal solid waste process facilities that store combustible materials outdoors, or that pose a significant risk to public health and safety as determined by the executive director.

Proposed new §330.282, Closure for Process Facilities, replaces the proposed repeal of §330.282.

Proposed new §330.282(a), requires the owner or operator of an affected facility to submit a detailed written cost estimate for closure of the facility. In order to ensure that financial assurance will cover closure costs for a facility, this estimate must be based on the collection, transportation, and disposal of processed and unprocessed materials in cubic yard and/or short ton measure by a third party not owned or affiliated with the recycling facility.

Proposed new §330.282(b), establishes the actual financial assurance requirement for owners or operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety. The subsection also refers affected entities to 30 TAC Chapter 37, Subchapter J for specific financial assurance requirements for recycling facilities.

Proposed new §330.282(c) describes requirements for closure of affected recycling facilities. This subsection defines closure to include the collection, transportation, and disposal of processed and unprocessed materials. The deadline for closure is set at 180 days following the most recent acceptance of material unless otherwise approved or directed by the executive director.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jeffrey Horvath, Analyst, Strategic Planning and Grants Management, determined that for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency as a result of the administration or enforcement of the proposed rules. No fiscal implications are anticipated for other units of state or local government as a result of the proposed rules.

The proposed amendments implement House Bill 1823. The proposed amendments require owners or operators of recycling facilities that store combustible material outdoors or recycling facilities that pose a significant risk to public health and safety to have sufficient financial assurance to properly operate and close the facility. The proposed amendments do not apply to a facility that is owned or operated by, or affiliated with a person who has a permit to dispose of municipal solid waste or to facilities owned or operated by local governments, affiliates of metal smelters, or facilities that accept no financial compensation to accept materials.

The agency estimates that there are approximately 206 composting, recycling, and industrial recycling facilities that may store combustible materials and otherwise be subject to the proposed rules. Under the proposed amendments, owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. The agency's Waste Permits Division would need to evaluate closure cost estimates submitted by the facilities, and the agency's Financial Administration Division would need to review and monitor financial assurance mechanisms obtained by the facilities. These operational impacts are expected to have fiscal implications for the agency, though they are not anticipated to be significant.

PUBLIC BENEFITS AND COSTS

Mr. Horvath also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the enforcement of and compliance with the proposed rules will be compliance with state law. Financial assurance for recycling facilities may also provide financial support in some cases to local governments if they are ever faced with the costs of closing one of the affected facilities.

Fiscal implications, which may be significant, are anticipated for businesses and individuals affected by the proposed amendments.

Owners and operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety would need to obtain sufficient financial assurance to cover the costs of properly closing the facility. Owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. These closure cost estimates would be submitted for approval to the agency. Except for facilities that have a tangible net worth of at least $10 million and meet other financial qualifications to self-insure, affected facilities will incur an annual cost to obtain a financial assurance mechanism. Financial assurance costs will vary depending upon the specific facility, as well as the financial strength and size of the owner/operator. If affected owners and operators do not meet the qualifications of the financial test, they could obtain financial assurance in the form of a surety bond, letter of credit, trust, or the purchase of an insurance policy. These costs are estimated to range between 1% and 5% per year of the cost of closing the facility.

Costs to properly close most composting, mulching, and affected recycling facilities are estimated to range between $20,000 and $200,000 depending upon the amount and type of material that would need to be disposed of, and the method of disposal. A few larger facilities may require up to $2 million to properly dispose of their wastes, while some smaller facilities may require less than $20,000. For the purposes of this fiscal note, it is assumed that for the estimated 206 affected facilities, most of them would incur costs of between $20,000 and $200,000 to properly close their site. Further, the cost to obtain proper financial assurance is estimated to be 5% of the closure costs, and is therefore estimated to be between $1,000 and $10,000 per year for each of the estimated 206 affected facilities. Total costs for all owners and operators are roughly estimated to be as low as $206,000 and as high as $2.06 million each year for the five-year period covered by the fiscal note.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Adverse fiscal implications are anticipated as a result of implementation of the proposed rules for small or micro-businesses. It is not known how many of the estimated 206 affected facilities are small or micro-businesses, but it is likely that most of these facilities would meet the criteria.

The following is an analysis of the potential costs per employee for small or micro-businesses affected by the proposed amendments. Small and micro-businesses are defined as having fewer than 100 or 20 employees, respectively. A small business that purchases a financial assurance mechanism could incur additional costs of between $1,000 to $10,000 per year or between $10.00 and $100 per employee. A micro-business that purchases financial assurance could incur additional costs of between $50 and $500 per employee.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rules in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rules are not subject to §2001.0225 because they do not meet the criteria for a "major environmental rule" as defined in that statute.

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, 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 specific intent of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. Therefore, it is not anticipated that the proposed rules will 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 commission concludes that these proposed rules do not meet the definition of a major environmental rule.

Furthermore, even if the proposed rules did meet the definition of a major environmental rule, the proposed rules are not subject to Texas Government Code, §2001.0225, because they do not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed rules do not meet any of these requirements. First, there are no applicable federal standards that these rules would address. Second, the proposed rules do not exceed an express requirement of state law, but instead implement the statutory requirement of THSC, 361.119. Third, there is no delegation agreement that would be exceeded by these proposed rules because none relate to this subject matter. Fourth, the commission proposes these rules under the rulemaking direction of House Bill 1823, amending THSC, §361.119, and not solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed an assessment of whether the proposed rules constitute a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. The proposed rules would substantially advance this stated purpose by requiring that regulated facilities obtain adequate financial assurance to properly close a facility.

Promulgation and enforcement of these proposed rules would be neither a statutory nor a constitutional taking of private real property because the proposed rules do not affect real property.

In particular, there are no burdens imposed on private real property, and the proposed rules would improve the commission's ability to ensure proper closure of certain recycling facilities. Because the regulation does not affect real property, it does not burden, restrict, or limit an owner's right to property or reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. Therefore, these proposed rules will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), relating to rules subject to the Texas Coastal Management Program (CMP), and therefore, requires that goals and policies of the CMP be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed rulemaking is consistent with CMP goals and policies because the rulemaking is an administrative action that requires financial mechanisms to pay for closure activities; will not have direct or significant adverse effect on any coastal natural resource areas; will not have a substantive effect on commission actions subject to the CMP; and promulgation and enforcement of the proposed rules will not violate (exceed) any standards identified in the applicable CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

ANNOUNCEMENT OF HEARING

The commission will hold a public hearing on this proposal in Austin on May 20, 2004 at 10:00 a.m. in Building F, Room 2210, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes before the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-002-037-AD. Comments must be received by 5:00 p.m., May 24, 2004. For further information or questions concerning this proposal, please contact Debi Dyer, Policy and Regulations Division, at (512) 239-3972.

Subchapter A. GENERAL INFORMATION

30 TAC §330.3

STATUTORY AUTHORITY

The amendment is proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendment implements House Bill 1823.

§330.3.Applicability.

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

(c) MSWLF units that receive waste after October 9, 1991, but stop receiving waste before October 9, 1993, are exempt from the requirements of this chapter except for the final cover requirements specified in §330.252 of this title (relating to Closure Requirements for MSWLF Units That Receive Waste on or after October 9, 1991, But [ but ] Stop Receiving Waste Prior to October 9, 1993). The final cover must be installed and certified in accordance with the requirements contained in §§330.250 - 330.253 of this title (relating to Closure and Post-Closure). Owners or operators of MSWLF units described in this subsection that fail to complete cover installation and certification within the time limits specified in §§330.250 - 330.256 of this title will be subject to all the requirements of these regulations.

(d) (No change.)

(e) Owners or operators of new, existing, and lateral expansions of small MSWLF units that dispose of less than 20 tons of MSW daily in the small MSWLF unit based on an annual average are exempt from §§330.200 - 330.206 of this title (relating to Groundwater Protection Design and Operation) and §§330.230, 330.231, and 330.233 - 330.242 of this title (relating to Groundwater Monitoring and Corrective Action), so long as there is no evidence of existing groundwater contamination from the small MSWLF unit, the small MSWLF unit serves a community that has no practicable waste management alternative, and the small MSWLF unit is located in an area that receives less than or equal to 25 inches of annual average precipitation. Requests for exemptions under subsection (f) of this section may be approved administratively by the executive director, upon demonstration of compliance with these criteria. An exemption request may be denied if [ by ] the executive director [ if he ] determines that granting the exemption could result in a substantial threat of groundwater contamination, based upon information made available to the executive director [ him ] from the applicant or agency files. Owners or operators may appeal such denials to the commission for decision.

(f) - (g) (No change.)

(h) Owners or operators of MSW facilities are required to comply with the financial assurance requirements specified in Chapter 37, Subchapter R of this title (relating to Financial Assurance for Municipal Solid Waste Facilities) and [ Chapter 330, ] Subchapter K of this chapter [ title ] (relating to Closure, Post-Closure, and Corrective Action) ; however, owners and operators of recycling facilities that store combustible materials outdoors, or that pose a significant risk to public health and safety as determined by the executive director, are required to comply with Chapter 37, Subchapter J of this title (relating to Financial Assurance for Recycling Facilities) rather than Chapter 37, Subchapter R of this title.

(i) (No change.)

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402389

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Subchapter K. CLOSURE, POST-CLOSURE, AND CORRECTIVE ACTION

30 TAC §330.280, §330.282

STATUTORY AUTHORITY

The amendment and new section are proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendment and new section implement House Bill 1823.

§330.280.Applicability.

The closure, post-closure, or corrective action requirements of this section apply to owners and operators of any municipal solid waste facility authorized under this chapter and any municipal solid waste process facility as defined in §330.41(f) of this title (relating to Types of Municipal Solid Waste Sites) that stores combustible material outdoors, or that poses a significant risk to public health and safety as determined by the executive director .

§330.282.Closure for Process Facilities.

(a) Closure cost estimates.

(1) An owner or operator of a recycling facility that stores combustible material outdoors, or that poses a significant risk to the public health and safety as determined by the executive director, shall provide a detailed written cost estimate, in current dollars, showing the cost of hiring a third party to close the process facility by removing the processed and unprocessed materials from the facility and hauling the processed and unprocessed materials to an authorized disposal facility. The cost estimate for financial assurance must be submitted with any new permit application; with any application for a permit transfer; as a modification for all existing municipal solid waste process facilities that remain in operation after October 9, 1993; or as otherwise requested by the executive director.

(2) The estimate must:

(A) equal the costs of closure of the facility including disposal of the maximum inventories of all processed and unprocessed materials on-site during the life of the facility;

(B) be based on the costs of hiring a third party that is not affiliated (as defined in §328.2 of this title (relating to Definitions)) with the owner or operator; and

(C) be based on a per cubic yard and/or short ton measure for collection and disposal costs.

(3) An increase in the closure cost estimate and the amount of financial assurance provided under subsection (b) of this section must be made if changes to the facility conditions increase the maximum cost of closure at any time during the active life of the facility.

(4) A reduction in the closure cost estimate and the amount of financial assurance provided under subsection (b) of this section may be approved if the cost estimate exceeds the maximum cost of closure at any time during the remaining life of the facility and the owner or operator has provided written notice to the executive director of the detailed justification for the reduction of the closure cost estimate and the amount of financial assurance. For a permitted or registered facility, a reduction in the cost estimate and the financial assurance must be considered a modification and must be handled as such.

(b) Financial assurance.

(1) An owner or operator of a recycling facility that stores combustible material outdoors, or that poses a significant risk to public health and safety as determined by the executive director shall establish and maintain financial assurance for closure of the facility in accordance with Chapter 37, Subchapter J of this title (relating to Financial Assurance for Recycling Facilities).

(2) Except as provided in paragraph (1) of this subsection, the owner or operator of any municipal solid waste process facility shall establish financial assurance for closure of the facility in accordance with Chapter 37, Subchapter R of this title (relating to Financial Assurance for Municipal Solid Waste Facilities).

(3) Continuous financial assurance coverage for closure must be provided until all requirements of the final closure plan have been completed and the site is determined in writing by the executive director to be closed.

(c) Closure requirements.

(1) Closure must include collecting processed and unprocessed materials, and transporting the materials to an authorized facility for disposition unless otherwise approved or directed in writing by the executive director.

(2) Closure of the facility must be completed within 180 days following the most recent acceptance of processed or unprocessed materials unless otherwise directed or approved in writing by the executive director.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402390

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

30 TAC §330.282

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas Commission on Environmental Quality or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

STATUTORY AUTHORITY

The repeal is proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed repeal implements House Bill 1823.

§330.282.Closure for Process Facilities.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402391

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Chapter 332. COMPOSTING

The Texas Commission on Environmental Quality (commission) proposes amendments to §332.34 and §332.47.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

This rulemaking implements the requirements of House Bill 1823, 78th Legislature, 2003, which amends Texas Health and Safety Code (THSC), §361.119, to require that owners and operators of recycling facilities, including composting or mulching facilities, have sufficient financial assurance in place. The financial assurance must be conditioned on satisfactorily operating and closing the facility, consistent with the requirements of THSC, §361.085, for a solid waste facility other than a facility for the disposal of hazardous waste. House Bill 1823 applies to an owner or operator of a recycling facility at which combustible material is stored outdoors or that poses a significant risk to public health and safety as determined by the commission. The legislation also exempts a facility that is owned, operated, or affiliated with a person who has a permit to dispose of municipal solid waste from rules adopted under this section of law.

Corresponding rulemakings published in this issue of the Texas Register include changes to 30 TAC Chapter 37, Financial Assurance; Chapter 328, Waste Minimization and Recycling; Chapter 330, Municipal Solid Waste; and Chapter 335, Industrial Solid Waste and Municipal Hazardous Waste.

SECTION BY SECTION DISCUSSION

Administrative and grammatical changes are proposed throughout the sections to be consistent with Texas Register requirements and to improve readability.

Proposed amended §332.34, Registration Application, adds, in new paragraph (15), a financial assurance requirement to the application process for registered composting facilities and provides cross-references to establish consistency in the commission's rules.

Proposed amended §332.47, Permit Application Preparation, modifies, in paragraph (9), a cross-reference for financial assurance requirements for permitted composting facilities to establish consistency in the commission's rules. The pay-in trust mechanism will not be allowed since determination of the payment amount requires a known permit life and no permit life will be specified in applicable permits.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jeffrey Horvath, Analyst, Strategic Planning and Grants Management, determined that for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency as a result of the administration or enforcement of the proposed rules. No fiscal implications are anticipated for other units of state or local government as a result of the proposed rules.

The proposed amendments implement House Bill 1823. The proposed amendments require owners or operators of recycling facilities that store combustible material outdoors or recycling facilities that pose a significant risk to public health and safety to have sufficient financial assurance to properly operate and close the facility. The proposed amendments do not apply to a facility that is owned or operated by, or affiliated with a person who has a permit to dispose of municipal solid waste or to facilities owned or operated by local governments, affiliates of metal smelters, or facilities that accept no financial compensation to accept materials.

The agency estimates that there are approximately 77 mulching and composting facilities that store combustible materials and otherwise be subject to the proposed rules. Under the proposed amendments, owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. The agency's Waste Permits Division would need to evaluate closure cost estimates submitted by the facilities, and the agency's Financial Administration Division would need to review and monitor financial assurance mechanisms obtained by the facilities. These operational impacts are expected to have fiscal implications for the agency, though they are not anticipated to be significant.

PUBLIC BENEFITS AND COSTS

Mr. Horvath also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the enforcement of and compliance with the proposed rules will be compliance with state law. Financial assurance for recycling facilities may also provide financial support in some cases to local governments if they are ever faced with the costs of closing one of the affected facilities.

Fiscal implications, which may be significant, are anticipated for businesses and individuals affected by the proposed amendments.

Owners and operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety would need to obtain sufficient financial assurance to cover the costs of properly closing the facility. Owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. These closure cost estimates would be submitted for approval to the agency. Except for facilities that have a tangible net worth of at least $10 million and meet other financial qualifications to self-insure, affected facilities will incur an annual cost to obtain a financial assurance mechanism. Financial assurance costs will vary depending upon the specific facility, as well as the financial strength and size of the owner/operator. If affected owners and operators do not meet the qualifications of the financial test, they could obtain financial assurance in the form of a surety bond, letter of credit, trust, or the purchase of an insurance policy. These costs are estimated to range between 1% and 5% per year of the cost of closing the facility.

Costs to properly close most composting, mulching, and affected recycling facilities are estimated to range between $20,000 and $200,000 depending upon the amount and type of material that would need to be disposed of, and the method of disposal. A few larger facilities may require up to $2 million to properly dispose of their wastes, while some smaller facilities may require less than $20,000. For the purposes of this fiscal note, it is assumed that for the estimated 77 affected facilities, most of them would incur costs of between $20,000 and $200,000 to properly close their site. Further, the cost to obtain proper financial assurance is estimated to be 5% of the closure costs, and is therefore estimated to be between $1,000 and $10,000 per year for each of the estimated 77 affected facilities. Total costs for all owners and operators are roughly estimated to be as low as $77,000 and as high as $770,000 each year for the five-year period covered by the fiscal note.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Adverse fiscal implications are anticipated as a result of implementation of the proposed rules for small or micro-businesses. It is not known how many of the estimated 77 affected facilities are small or micro-businesses, but it is likely that most of these facilities would meet the criteria.

The following is an analysis of the potential costs per employee for small or micro-businesses affected by the proposed amendments. Small and micro-businesses are defined as having fewer than 100 or 20 employees, respectively. A small business that purchases a financial assurance mechanism could incur additional costs of between $1,000 to $10,000 per year or between $10.00 and $100 per employee. A micro-business that purchases financial assurance could incur additional costs of between $50 and $500 per employee.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rules in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rules are not subject to §2001.0225 because they do not meet the criteria for a "major environmental rule" as defined in that statute.

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, 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 specific intent of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. Therefore, it is not anticipated that the proposed rules will 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 commission concludes that these proposed rules do not meet the definition of a major environmental rule.

Furthermore, even if the proposed rules did meet the definition of a major environmental rule, the proposed rules are not subject to Texas Government Code, §2001.0225, because they do not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed rules do not meet any of these requirements. First, there are no applicable federal standards that these rules would address. Second, the proposed rules do not exceed an express requirement of state law, but instead implement the statutory requirement of THSC, §361.119. Third, there is no delegation agreement that would be exceeded by these proposed rules because none relate to this subject matter. Fourth, the commission proposes these rules under the rulemaking direction of House Bill 1823, amending THSC, §361.119, and not solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed an assessment of whether the proposed rules constitute a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rules is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. These rules will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. The proposed rules would substantially advance this stated purpose by requiring that regulated facilities obtain adequate financial assurance to properly close a facility.

Promulgation and enforcement of these proposed rules would be neither a statutory nor a constitutional taking of private real property because the proposed rules do not affect real property.

In particular, there are no burdens imposed on private real property, and the proposed rules would improve the commission's ability to ensure proper closure of certain recycling facilities. Because the regulation does not affect real property, it does not burden, restrict, or limit an owner's right to property or reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. Therefore, these proposed rules will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), relating to rules subject to the Texas Coastal Management Program (CMP), and therefore, requires that goals and policies of the CMP be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed rulemaking is consistent with CMP goals and policies because the rulemaking is an administrative action that requires financial mechanisms to pay for closure activities; will not have direct or significant adverse effect on any coastal natural resource areas; will not have a substantive effect on commission actions subject to the CMP; and promulgation and enforcement of the proposed rules will not violate (exceed) any standards identified in the applicable CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

ANNOUNCEMENT OF HEARING

The commission will hold a public hearing on this proposal in Austin on May 20, 2004 at 10:00 a.m. in Building F, Room 2210, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes before the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-002-037-AD. Comments must be received by 5:00 p.m., May 24, 2004. For further information or questions concerning this proposal, please contact Debi Dyer, Policy and Regulations Division, at (512) 239-3972.

Subchapter C. OPERATIONS REQUIRING A REGISTRATION

30 TAC §332.34

STATUTORY AUTHORITY

The amendment is proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendment implements House Bill 1823.

§332.34.Registration Application.

Registration applications for composting must include:

(1) Title page. The title page shall show the name of the project, the name of the applicant, and the location by city and county.

(2) - (4) (No change.)

(5) Legal authority. The applicant shall provide verification of his/her legal status. Normally, this is a one-page certificate of incorporation issued by the Office of the Secretary of State.

(6) (No change.)

(7) Notice of appointment [ Appointment ]. The applicant shall provide a notice of appointment identifying the applicant's engineer.

(8) (No change.)

(9) Legal description. The applicant shall provide the following:

(A) (No change.)

(B) a boundary metes and bounds drawing and description of the site signed and sealed by a registered professional land surveyor [ Registered Professional Land Surveyor ].

(10) Location description.

(A) Map. The applicant shall clearly show the boundaries of the planned facility on a map that is all or a portion of a county map prepared by Texas Department of Transportation (TxDOT). At a minimum, the map shall be at a scale of 1/2 [ one-half ] inch equals one mile.

(B) (No change.)

(11) (No change.)

(12) Site operating plan. The applicant shall submit a site operating plan. This document is to provide guidance from the design engineer to site management and operating personnel in sufficient detail to enable them to conduct day-to-day [ day to day ] operations in a manner consistent with the engineer's design. At a minimum, the site operating plan shall include specific guidance or instructions on all of the following:

(A) [ Process description. ] the [ The ] process description , which must [ shall ] be composed of a descriptive narrative along with a process diagram. The process description shall include the items listed in clauses (i) - (vi) of this subparagraph. [ : ]

(i) (No change.)

(ii) Tipping process. Indicate what happens to the feedstock material from the point it enters the gate. Indicate how the material is handled in the tipping area, how long it remains in the tipping area, what equipment is used, how the material is evacuated from the tipping area, at what interval the tipping area is cleaned, and the process used to clean the tipping area.

(iii) (No change.)

(iv) Post-processing. Provide a complete narrative on the post-processing process, include post- processing times, identification and segregation of product, storage of product, quality assurance , and quality control.

(v) (No change.)

(vi) Process diagram. Present a process diagram that displays graphically, the narrative generated in response to clauses (i) - (v) of this paragraph ; [ . ]

(B) the [ The ] minimum number of personnel and their functions to be provided by the site operator in order to have adequate capability to conduct the operation in conformance with the design and operational standards ; [ . ]

(C) the [ The ] minimum number and operational capacity of each type of equipment to be provided by the site operator in order to have adequate capability to conduct the operation in conformance with the design and operational standards ; [ . ]

(D) security [ Security ], site access control, traffic control , and safety ; [ . ]

(E) control [ Control ] of dumping within designated areas, screening for unprocessable, prohibited, and unauthorized material ; [ . ]

(F) a [ A ] fire prevention and suppression plan that complies [ shall comply ] with provisions of the local fire code, which shall also be sent to the local fire protection entity responsible for responding to a fire at the facility ; [ . ]

(G) control [ Control ] of windblown material ; [ . ]

(H) vector [ Vector ] control ; [ . ]

(I) quality [ Quality ] assurance and quality control.

(i) (No change.)

(ii) All other registered facilities. As a minimum , the applicant shall provide testing and assurance in accordance with the provisions of §332.71 of this title (relating to Sampling and Analysis Requirements for Final Product).

(J) equipment [ Equipment ] failures , including alternative plans in the event of an equipment failure ; and [ . ]

(K) a [ A ] description of the anticipated final grade of the materials.

(13) Construction plans and specifications. The applicant shall submit facility construction plans and specifications. The facility plans and specifications [ specification ] shall reflect the provisions of this chapter to the maximum extent possible.

(14) Closure plan. The applicant shall provide a plan for proper closure of the facility , including disposition of any remaining feedstocks, in-process, and processed materials.

(15) Financial assurance. The applicant shall be subject to the requirements of §328.5(c) - (e) of this title (relating to Reporting and Recordkeeping Requirements).

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402392

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Subchapter D. OPERATIONS REQUIRING A PERMIT

30 TAC §332.47

STATUTORY AUTHORITY

The amendment is proposed under THSC, §361.119, as amended by House Bill 1823; and THSC, §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendment implements House Bill 1823.

§332.47.Permit Application Preparation.

To assist the commission in evaluating the technical merits of a compost facility, an applicant subject to this chapter shall submit a site development plan to the commission along with Compost Form Number 3. The site development plan must be sealed by a registered professional engineer in accordance with the provisions of 22 TAC §131.166 (relating to Engineers' Seals). If the site development plan is submitted in a three-ring binder or in a format that allows the removal or insertion of individual pages, it will not be considered a bound document. The site development plan must contain all of the following information.

(1) - (5) (No change.)

(6) Facility development. To assist the executive director in evaluating the impact of the facility on the environment, the applicant shall provide the following.

(A) Surface water protection plan. The surface water protection plan shall be prepared by a registered professional engineer. At a minimum, the applicant shall provide all of the following:

(i) (No change.)

(ii) a design for a runoff [ run-off ] management system to collect and control at least the peak discharge from the facility generated by a 25-year, 24-hour rainfall event;

(iii) (No change.)

(iv) drainage calculations as follows . [ : ]

(I) - (II) (No change.)

(III) Calculations for sizing containment facilities for leachate shall be determined by a mass balance based on the facility's [ facilities ] proposed leachate disposal method.

(IV) (No change.)

(v) drainage maps and drainage plans shall be provided as follows:

(I) an off-site topographic drainage map showing all areas which contribute to the facility's [ facilities ] run-on. The map shall delineate the drainage basins and sub-basins, show the direction of flow, time of concentration, basin area, rainfall intensity, and flow rate. This map shall also show all creeks, rivers, intermittent streams, lakes, bayous, bays, estuaries, arroyos, and other surface waters in the state;

(II) - (VII) (No change.)

(B) Geologic/hydrogeologic report. The geologic/hydrogeologic report shall be prepared by an engineer or qualified geologist/hydrogeologist. The applicant shall include discussion and information on all of the following:

(i) - (iii) (No change.)

(iv) subsurface investigation report. This report shall describe all borings drilled on-site to test soils and characterize groundwater and shall include a site map drawn to scale showing the surveyed locations and elevations of the boring. Boring logs shall include a detailed description of materials encountered including any discontinuities such as fractures, fissures, slickensides, lenses, or seams. Each boring shall be presented in the form of a log that contains, at a minimum, the boring number; surface elevation and location coordinates; and a columnar section with text showing the elevation of all contacts between soil and rock layers description of each layer using the Unified Soil Classification, color, degree of compaction, and moisture content. A key explaining the symbols used on the boring logs and the classification terminology for soil type, consistency, and structure shall be provided.

(I) - (V) (No change.)

(VI) The report shall contain a summary of the investigator's interpretations of the subsurface stratigraphy based upon the field investigation ; [ . ]

(v) (No change.)

(C) Groundwater protection plan. The application shall demonstrate that the facility is designed so as not to contaminate the groundwater and so as to protect the existing groundwater quality from degradation. For the purposes of these sections, protection of the groundwater includes the protection of perched water or shallow surface infiltration. As a minimum, groundwater protection shall consist of all of the following.

(i) (No change.)

(ii) Groundwater monitor system. The groundwater monitoring system shall be designed and installed such that the system will reasonably assure detection of any contamination of the groundwater before it migrates beyond the boundaries of the site. The monitoring system shall be designed based upon the information obtained in the "Groundwater investigation report" required by subparagraph (B)(v) of this paragraph.

(I) (No change.)

(II) A groundwater sampling program shall provide four background groundwater samples of all monitor wells within 24 months from the date of the issuance of the permit. The background levels shall be established from samples collected from each well at least once during each of the four calendar quarters: January - March; April - June; July - September; and October - December. Samples from any monitor well shall not be collected for at least 45 days following collection of a previous sample, unless a replacement sample is necessary. At least one sample per well shall be collected and submitted to a laboratory for analysis within 60 days of permit issuance for existing or previously registered operations, or prior to accepting any material for processing at a new facility. Background samples shall be analyzed for the parameters as follows:

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

(-c-) after background values have been determined , the following indicators shall be measured at a minimum of 12-month intervals: TOC (four replicates), iron, manganese, pH, chloride, groundwater elevation (MSL), and total dissolved solids. After completion of the analysis, an original and two copies shall be sent to the executive director and a copy shall be maintained on site [ on-site ].

(-d-) - (-e-) (No change.)

(D) Facility plan and facility layout. The facility plan and facility layout must be prepared by a registered professional engineer. All proposed facilities, structures, and improvements must be clearly shown and annotated on this drawing. The plan must be drawn to standard engineering scale. Any necessary details or sections must be included. As a minimum, the plan must show property boundaries, fencing, internal roadways, tipping area, processing area, post-processing area, facility office, sanitary facilities, potable water facilities, storage areas, etc. If phasing is proposed for the facility, a separate facility plan for each phase is required.

(E) Process description. The process description shall be composed of a descriptive narrative along with a process diagram. The process description shall include all of the following.

(i) - (iii) (No change.)

(iv) Post-processing. Provide a complete narrative on the post-processing, including [ include ] post-processing times, identification and segregation of product, storage of product, quality assurance, and quality control.

(v) - (vi) (No change.)

(7) - (8) (No change.)

(9) Financial assurance. The applicant shall prepare a closure plan acceptable to the executive director and provide evidence of financial assurance to the commission for the cost of closure. The closure plan at a minimum, shall include evacuation of all material on site [ on-site ] (feedstock, in process, and processed) to an authorized facility and disinfection of all leachate handling facilities, tipping area, processing area, and post-processing area and shall be based on the worst case closure scenario for the facility, including the assumption that all storage and processing areas are filled to capacity. Financial assurance mechanisms must be established and maintained in accordance with Chapter 37, Subchapter J of this title (relating to Financial Assurance for Recycling Facilities). [ The financial assurance may be demonstrated by using one or more of the following mechanisms: trust funds, surety bonds, letters of credit, insurance, financial test, and corporate guarantee. ] These mechanisms shall be prepared on forms approved by the executive director and shall be submitted to the commission 60 days prior to the receiving of any materials for processing, or within 60 days of a permit being issued for facilities operating under an existing registration. [ Financial assurance mechanisms prepared are subject to the requirements of Chapter 37 of this title (relating to Financial Assurance). ]

(10) (No change.)

(11) Landowner list. The applicant shall include a list of landowners, residents, and businesses within 1/2 [ one half ] mile of the facility boundaries along with an appropriately scaled map locating property owned by the landowners.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402393

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017

Chapter 335. INDUSTRIAL SOLID WASTE AND MUNICIPAL HAZARDOUS WASTE

Subchapter A. INDUSTRIAL SOLID WASTE AND MUNICIPAL HAZARDOUS WASTE IN GENERAL

30 TAC §335.24

The Texas Commission on Environmental Quality (commission) proposes an amendment to §335.24.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULE

This rulemaking implements the requirements of House Bill 1823, 78th Legislature, 2003, which amends Texas Health and Safety Code (THSC), §361.119, to require that owners and operators of recycling facilities, including composting or mulching facilities, have sufficient financial assurance in place. The financial assurance must be conditioned on satisfactorily operating and closing the facility, consistent with the requirements of THSC, §361.085, for a solid waste facility other than a facility for the disposal of hazardous waste. House Bill 1823 applies to an owner or operator of a recycling facility at which combustible material is stored outdoors or that poses a significant risk to public health and safety as determined by the commission. The legislation also exempts a facility that is owned, operated, or affiliated with a person who has a permit to dispose of municipal solid waste from rules adopted under this section of law.

Corresponding rulemakings published in this issue of the Texas Register include changes to 30 TAC Chapter 37, Financial Assurance; Chapter 328, Waste Minimization and Recycling; Chapter 330, Municipal Solid Waste; and Chapter 332, Composting.

SECTION DISCUSSION

Administrative and grammatical changes are proposed throughout the section to be consistent with Texas Register requirements and to improve readability. As appropriate, subsections have been relettered to accommodate new language.

The proposed amendment to §335.24, Requirements for Recyclable Materials and Nonhazardous Recyclable Materials, modifies subsection (a) to indicate that nonhazardous recyclable materials are subject to regulation under subsections (h) - (l) rather than the previous provisions under subsection (h) only. This modification is necessary to reflect the addition of new subsections (j) - (l).

Proposed subsection (j) requires the owner or operator of an affected facility to submit a detailed written cost estimate for closure of the facility. In order to ensure that financial assurance will cover closure costs for a facility, this estimate must be based on the collection, transportation, and disposal of processed and unprocessed materials in cubic yards and/or short ton measure by a third party not owned or affiliated with the recycling facility.

Proposed subsection (k) establishes the actual financial assurance requirement for owners or operators of recycling facilities that store combustible materials outdoors or pose a significant risk to public health and safety. The section also refers affected entities to proposed Chapter 37, Subchapter J for specific financial assurance requirements for recycling facilities.

Proposed subsection (l) describes requirements for closure of affected recycling facilities. This subsection defines closure to include the collection, transportation, and disposal of processed and unprocessed materials. The deadline for closure is set at 180 days following the most recent acceptance of material unless otherwise approved or directed by the executive director.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

Jeffrey Horvath, Analyst, Strategic Planning and Grants Management, determined that for the first five-year period the proposed rule is in effect, no significant fiscal implications are anticipated for the agency as a result of the administration or enforcement of the proposed rule. No fiscal implications are anticipated for other units of state or local government as a result of the proposed rule.

The proposed amendment implements House Bill 1823. The proposed amendment requires owners or operators of recycling facilities that store combustible material outdoors or recycling facilities that pose a significant risk to public health and safety to have sufficient financial assurance to properly operate and close the facility. The proposed amendment does not apply to a facility that is owned or operated by, or affiliated with a person who has a permit to dispose of municipal solid waste or to facilities owned or operated by local governments, affiliates of metal smelters, or facilities that accept no financial compensation to accept materials.

The agency estimates that there are approximately 206 composting, recycling, and industrial recycling facilities that may store combustible materials and otherwise be subject to the proposed rule. Under the proposed amendment, owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. The agency's Waste Permits Division would need to evaluate closure cost estimates submitted by the facilities, and the agency's Financial Administration Division would need to review and monitor financial assurance mechanisms obtained by the facilities. These operational impacts are expected to have fiscal implications for the agency, though they are not anticipated to be significant.

PUBLIC BENEFITS AND COSTS

Mr. Horvath also determined that for each year of the first five years the proposed rule is in effect, the public benefit anticipated from the enforcement of and compliance with the proposed rule will be compliance with state law. Financial assurance for recycling facilities may also provide financial support in some cases to local governments if they are ever faced with the costs of closing one of the affected facilities.

Fiscal implications, which may be significant, are anticipated for businesses and individuals affected by the proposed amendment.

Owners and operators of recycling facilities that store combustible materials outdoors or that pose a significant risk to public health and safety would need to obtain sufficient financial assurance to cover the costs of properly closing the facility. Owners and operators would need to calculate the costs of properly closing the facility in order to determine how much financial assurance they would need to have in place. These closure cost estimates would be submitted for approval to the agency. Except for facilities that have a tangible net worth of at least $10 million and meet other financial qualifications to self-insure, affected facilities will incur an annual cost to obtain a financial assurance mechanism. Financial assurance costs will vary depending upon the specific facility, as well as the financial strength and size of the owner/operator. If affected owners and operators do not meet the qualifications of the financial test, they could obtain financial assurance in the form of a surety bond, letter of credit, trust, or the purchase of an insurance policy. These costs are estimated to range between 1% and 5% per year of the cost of closing the facility.

Costs to properly close most composting, mulching, and affected recycling facilities are estimated to range between $20,000 and $200,000 depending upon the amount and type of material that would need to be disposed of, and the method of disposal. A few larger facilities may require up to $2 million to properly dispose of their wastes, while some smaller facilities may require less than $20,000. For the purposes of this fiscal note, it is assumed that for the estimated 206 affected facilities, most of them would incur costs of between $20,000 and $200,000 to properly close their site. Further, the cost to obtain proper financial assurance is estimated to be 5% of the closure costs, and is therefore estimated to be between $1,000 and $10,000 per year for each of the estimated 206 affected facilities. Total costs for all owners and operators are roughly estimated to be as low as $206,000 and as high as $2.06 million each year for the five-year period covered by the fiscal note.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

Adverse fiscal implications are anticipated as a result of implementation of the proposed rule for small or micro-businesses. It is not known how many of the estimated 206 affected facilities are small or micro-businesses, but it is likely that most of these facilities would meet the criteria.

The following is an analysis of the potential costs per employee for small or micro-businesses affected by the proposed amendment. Small and micro-businesses are defined as having fewer than 100 or 20 employees, respectively. A small business that purchases a financial assurance mechanism could incur additional costs of between $1,000 to $10,000 per year or between $10.00 and $100 per employee. A micro-business that purchases financial assurance could incur additional costs of between $50 and $500 per employee.

LOCAL EMPLOYMENT IMPACT STATEMENT

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rule does not adversely affect a local economy in a material way for the first five years that the proposed rule is in effect.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rule in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rule is not subject to §2001.0225 because it does not meet the criteria for a "major environmental rule" as defined in that statute.

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, 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 specific intent of the proposed rule is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. This rule will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. Therefore, it is not anticipated that the proposed rule will 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 commission concludes that the proposed rule does not meet the definition of a major environmental rule.

Furthermore, even if the proposed rule did meet the definition of a major environmental rule, the proposed rule is not subject to Texas Government Code, §2001.0225, because it does not meet any of the four applicable requirements specified in §2001.0225(a). Section 2001.0225(a) applies to a rule adopted by an agency, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law.

In this case, the proposed rule does not meet any of these requirements. First, there are no applicable federal standards that the rule would address. Second, the proposed rule does not exceed an express requirement of state law, but instead implements the statutory requirement of THSC, §361.119. Third, there is no delegation agreement that would be exceeded by the proposed rule because it does not relate to this subject matter. Fourth, the commission proposes the rule under the direction of House Bill 1823, amending THSC, §361.119, and not solely under the commission's general powers.

Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

TAKINGS IMPACT ASSESSMENT

The commission evaluated the proposed rule and performed an assessment of whether the proposed rule constitutes a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rule is to require the owner or operator of an affected recycling facility to have sufficient financial assurance to properly close a facility. This rule will apply to recycling facilities that store combustible material outdoors and recycling facilities that pose a significant risk to public health and safety. The proposed rule would substantially advance this stated purpose by requiring that regulated facilities obtain adequate financial assurance to properly close a facility.

Promulgation and enforcement of the proposed rule would be neither a statutory nor a constitutional taking of private real property because the proposed rule does not affect real property.

In particular, there are no burdens imposed on private real property, and the proposed rule would improve the commission's ability to ensure proper closure of certain recycling facilities. Because the regulation does not affect real property, it does not burden, restrict, or limit an owner's right to property or reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. Therefore, the proposed rule will not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the proposed rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), concerning rules subject to the Texas Coastal Management Program (CMP), and therefore, requires that goals and policies of the CMP be considered during the rulemaking process.

The commission reviewed this rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed rulemaking is consistent with CMP goals and policies because the rulemaking is an administrative action that requires financial mechanisms to pay for closure activities; will not have direct or significant adverse effect on any coastal natural resource areas; will not have a substantive effect on commission actions subject to the CMP; and promulgation and enforcement of the proposed rule will not violate (exceed) any standards identified in the applicable CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble.

ANNOUNCEMENT OF HEARING

The commission will hold a public hearing on this proposal in Austin on May 20, 2004 at 10:00 a.m. in Building F, Room 2210, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes before the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Project Number 2004-002-037-AD. Comments must be received by 5:00 p.m., May 24, 2004. For further information or questions concerning this proposal, please contact Debi Dyer, Policy and Regulations Division, at (512) 239-3972.

STATUTORY AUTHORITY

The amendment is proposed under THSC, §361.119, as amended by House Bill 1823; and §361.017 and §361.024, which provide the commission the authority to adopt rules necessary to carry out its power and duties under the Texas Solid Waste Disposal Act.

The proposed amendment implements House Bill 1823.

§335.24.Requirements for Recyclable Materials and Nonhazardous Recyclable Materials.

(a) Hazardous wastes that are recycled are subject to the requirements for generators, transporters, and storage facilities of subsections (d) - (f) of this section, except for the materials listed in subsections (b) and (c) of this section. Hazardous wastes that are recycled will be known as recyclable materials. Nonhazardous industrial wastes that are recycled will be known as nonhazardous recyclable materials. Nonhazardous recyclable materials are subject to the requirements of subsections (h) - (l) [ (h) and (i) ] of this section.

(b) The following recyclable materials are not subject to the requirements of this section, except as provided in subsections (g) and (h) of this section, but are regulated under the applicable provisions of Subchapter H of this chapter (relating to Standards for the Management of Specific Wastes and Specific Types of Facilities) and all applicable provisions in Chapter 305 of this title (relating to Consolidated Permits); Chapter 1 of this title (relating to Purpose of Rules, General Provisions); Chapter 3 of this title (relating to Definitions); Chapter 10 of this title (relating to Commission Meetings); Chapter 17 of this title (relating to Tax Relief for Property Used for Environmental Protection); Chapter 20 of this title (relating to Rulemaking); Chapter 37 of this title (relating to Financial Assurance); Chapter 39 of this title (relating to Public Notice); Chapter 40 of this title (relating to Alternative Dispute Resolution Procedure [ Procedures ]); Chapter 50 of this title (relating to Action on Applications and Other Authorizations ); Chapter 55 of this title (relating to Requests for Reconsideration and Contested Case Hearings; Public Comment [ Request for Contested Case Hearings ]); Chapter 70 of this title (relating to Enforcement); Chapter 80 of this title (relating to Contested Case Hearings); Chapter 86 of this title (relating to Special Provisions for Contested Case Hearings); and Chapter 261 of this title (relating to Impact Statements) [ (Introductory Provisions); and Chapter 277 of this title (relating to Use Determinations for Tax Exemption for Pollution Control Property) ].

(1) - (4) (No change.)

(c) The following recyclable materials are not subject to regulation under Subchapters B - I or O of this chapter (relating to Hazardous Waste Management General Provisions; Standards Applicable to Generators of Hazardous Waste; Standards Applicable to Transporters of Hazardous Waste; Interim Standards for Owners and Operators of Harzardous Waste Storage, Processing, or Disposal Facilities; Permitting Standards for Owners and Operators of Hazardous Waste Storage, Processing, or Disposal Facilities; [ Interim Standards for Owners and Operators of Hazardous Waste Storage, Processing, or Disposal Facilities; ] Location Standards for Hazardous Waste Storage, Processing, or Disposal; Standards for the Management of Specific Wastes and Specific Types of Facilities; Prohibition on Open Dumps; and Land Disposal Restrictions); Chapter 1 of this title [ (relating to Purpose of Rules, General Provisions) ]; Chapter 3 of this title [ (relating to Definitions) ]; Chapter 10 of this title [ (relating to Commission Meetings) ]; Chapter 17 of this title; Chapter 20 of this title [ (relating to Rulemaking) ]; Chapter 37 of this title [ (relating to Financial Assurance) ]; Chapter 39 of this title [ (relating to Public Notice) ]; Chapter 40 of this title [ (relating to Alternative Dispute Resolution Procedures) ]; Chapter 50 of this title [ (relating to Action on Applications) ]; Chapter 55 of this title [ (relating to Request for Contested Case Hearings) ]; Chapter 70 of this title [ (relating to Enforcement) ]; Chapter 80 of this title [ (relating to Contested Case Hearings) ]; Chapter 86 of this title [ (relating to Special Provisions for Contested Case Hearings ]; Chapter 261 of this title ; [ (relating to Introductory Provisions); Chapter 277 of this title (relating to Use Determinations for Tax Exemption for Pollution Control Property) ] or Chapter 305 of this title [ (relating to Consolidated Permits) ], except as provided in subsections (g) and (h) of this section:

(1) - (4) (No change.)

(d) (No change.)

(e) Owners or operators of facilities that store recyclable materials before they are recycled are regulated under all applicable provisions of this chapter, and Chapter 305 of this title [ (relating to Consolidated Permits) ]; Chapter 1 of this title [ (relating to Purpose of Rules, General Provisions) ]; Chapter 3 of this title [ (relating to Definitions) ]; Chapter 10 of this title [ (relating to Commission Meetings) ]; Chapter 17 of this title; Chapter 20 of this title [ (relating to Rulemaking) ]; Chapter 37 of this title [ (relating to Financial Assurance) ]; Chapter 39 of this title [ (relating to Public Notice) ]; Chapter 40 of this title [ (relating to Alternative Dispute Resolution Procedures) ]; Chapter 50 of this title [ (relating to Action on Applications) ]; Chapter 55 of this title [ (relating to Request for Contested Case Hearings) ]; Chapter 70 of this title [ (relating to Enforcement) ]; Chapter 80 of this title [ (relating to Contested Case Hearings) ]; [ Chapter 277 of this title (relating to Use Determinations for Tax Exemption for Pollution Control Property); ] and the notification requirements under §335.6 of this title, except as provided in subsections (a) - (c) of this section. The recycling process itself is exempt from regulation.

(f) - (g) (No change.)

(h) Industrial solid wastes that are nonhazardous recyclable materials and recyclable materials listed in subsections [ subsection ] (b)(4) and [ subsection ] (c)(2) of this section remain subject to the requirements of §335.4 of this title. In addition, industrial solid wastes that are nonhazardous recyclable materials and recyclable materials listed in subsection (c)(2) of this section remain subject to the requirements of §335.6 of this title. Industrial solid wastes that are nonhazardous recyclable materials and recyclable materials listed in subsections [ subsection ] (b)(4) and [ subsection ] (c)(2) of this section may also be subject to the requirements of §§335.10 - 335.15 of this title, as applicable, if the executive director determines that such requirements are necessary to protect human health and the environment. In making the determination, the executive director shall consider the following criteria:

(1) - (7) (No change.)

(8) whether subjecting the waste to additional regulation will provide additional protection for human health and the environment; and

(9) (No change.)

(i) Except as provided in Texas Health and Safety Code, §361.090, facilities managing recyclable materials that are required to obtain a permit under this section may also be permitted to manage nonhazardous recyclable materials at the same facility if the executive director determines that such regulation is necessary to protect human health and the environment. In making this determination, the executive director shall consider the following criteria:

(1) - (10) (No change.)

(11) whether subjecting the waste to additional regulation will provide additional protection for human health and the environment; and

(12) (No change.)

(j) Closure cost estimates.

(1) An owner or operator of a recycling facility that stores combustible nonhazardous materials outdoors, or that poses a significant risk to public health and safety as determined by the executive director, shall provide a detailed written cost estimate, in current dollars, showing the cost of hiring a third party to close the facility in accordance with the requirements of this section.

(2) The estimate must:

(A) equal the costs of closure of the facility, including disposal of the maximum inventories of all processed and unprocessed materials on-site during the life of the facility;

(B) be based on the costs of hiring a third party that is not affiliated (as defined in §328.2 of this title (relating to Definitions) with the owner or operator; and

(C) be based on a per cubic yard and/or short ton measure for collection and disposal costs.

(k) Financial assurance. An owner or operator of a recycling facility that stores nonhazardous combustible recyclable materials outdoors, or that poses a significant risk to public health and safety as determined by the executive director, shall establish and maintain financial assurance for closure of the facility in accordance with Chapter 37, Subchapter J of this title (relating to Financial Assurance for Recycling Facilities).

(l) Closure requirements.

(1) Closure shall include collecting processed and unprocessed materials, and transporting the materials to an authorized facility for disposition unless otherwise approved or directed in writing by the executive director.

(2) Closure of the facility must be completed within 180 days following the most recent acceptance of processed or unprocessed materials unless otherwise approved or directed in writing by the executive director.

(m) [ (j) ] Used oil that is recycled and is also a hazardous waste solely because it exhibits a hazardous characteristic is not subject to the requirements of Subchapters A - I or O of this chapter [ (relating to Industrial Solid Waste and Municipal Hazardous Waste in General; Hazardous Waste Management General Provisions; Standards Applicable to Generators of Hazardous Waste; Standards Applicable to Transporters of Hazardous Waste; Permitting Standards for Owners and Operators of Hazardous Waste Storage, Processing, or Disposal Facilities; Interim Standards for Owners and Operators of Hazardous Waste Storage, Processing, or Disposal Facilities; Location Standards for Hazardous Waste Storage, Processing, or Disposal; Standards for the Management of Specific Wastes and Specific Types of Facilities; Prohibition on Open Dumps; and Land Disposal Restrictions) ], but is regulated under Chapter 324 of this title (relating to Used Oil Standards ). Used oil that is recycled includes any used oil which is reused, following its original use, for any purpose (including the purpose for which the oil was originally used). Such term includes, but is not limited to, oil which is re-refined, reclaimed, burned for energy recovery, or reprocessed.

(n) [ (k) ] Owners or operators of facilities subject to hazardous waste permitting requirements with hazardous waste management units that recycle hazardous wastes are subject to the requirements of 40 CFR Part 264 or Part 265, Subparts AA and BB, as adopted by reference under §335.152(a)(17) and [ - ] (18) and §335.112(a)(19) and [ - ] (20) of this title (relating to Standards).

(o) [ (l) ] Hazardous waste that is exported to or imported from designated member countries of the Organization for Economic Cooperation and Development (OECD), as defined in 40 CFR §262.58(a)(1), for purpose of recovery, and any person who exports or imports such hazardous waste, is subject to the requirements of 40 CFR Part 262, Subpart H (both federal regulation references as amended and adopted through April 12, 1996 at 61 FedReg 16290), if the hazardous waste is subject to the federal manifesting requirements of 40 CFR Part 262, or subject to the universal waste management standards of 40 CFR Part 273, or subject to Subchapter H, Division 5 of this chapter (relating to Universal Waste Rule).

(p) [ (m) ] Other portions of this chapter that relate to solid wastes that are recycled include §335.1 of this title (relating to Definitions), under the definition of "Solid waste [ Waste ]," §335.6 of this title, §335.17 of this title (relating to Special Definitions for Recyclable Materials and Nonhazardous Recyclable Materials), §335.18 of this title (relating to Variances from Classification as a Solid Waste), §335.19 of this title (relating to Standards and Criteria for Variances from Classification as a Solid Waste), and Subchapter H of this chapter.

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

Filed with the Office of the Secretary of State on April 8, 2004.

TRD-200402394

Stephanie Bergeron

Director, Environmental Law Division

Texas Commission on Environmental Quality

Earliest possible date of adoption: May 23, 2004

For further information, please call: (512) 239-5017