PART 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY
CHAPTER 1. PURPOSE OF RULES, GENERAL PROVISIONS
The Texas Commission on Environmental Quality (commission or TCEQ) proposes an amendment to §1.10.
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULE
This proposed rulemaking is necessary to update the Texas Commission on Environmental Quality (TCEQ) rules to reflect the number of copies required to be filed in the Office of the Chief Clerk for all documents to be considered at a commission meeting. Currently, 11 copies are required. Decreasing the number of required copies to seven or less, as prescribed by the Chief Clerk or General Counsel, will reduce the amount of paper necessary for commission meeting filings and significantly reduce waste.
SECTION DISCUSSION
The proposed amendment to §1.10(d), Document Filing Procedures, would change the number of copies required for consideration at a commission meeting from 11 to seven or less, as prescribed by the Chief Clerk or General Counsel. The proposed amendment to §1.10(g) would define the acronym "SOAH" as "State Office of Administrative Hearings."
FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT
Nina Chamness, Analyst, Strategic Planning and Assessment, has determined that, for the first five-year period the proposed rule is in effect, no significant fiscal implications are anticipated for the agency or other units of state or local governments as a result of administration or enforcement of the proposed rule. The proposed rule will generate savings for the agency and other governmental entities because fewer copies of documentation will be required for commission meetings.
The proposed rule would amend §1.10 to decrease the number of hard copies that entities or individuals are currently required to file in the Office of the Chief Clerk. The proposed rule would decrease the number of hard copies from 11 to seven or less, as prescribed by the Chief Clerk or General Counsel. The reduction in the number of required copies is expected to generate some savings for governmental entities, although the amount of savings is not anticipated to be significant. The amount of savings will depend on the cost of paper, the number of pages to be copied, and the number of requests submitted for commission action. The agency expects to reduce the amount of waste generated from excess documentation, but the amount of waste reduction is not expected to generate a material amount of savings. The additional proposed amendment to §1.10(g) that defines the acronym "SOAH" as "State Office of Administrative Hearings" is administrative in nature and would have no fiscal implications.
PUBLIC BENEFITS AND COSTS
Nina Chamness also determined that for each year of the first five years the proposed rule is in effect, the public benefit anticipated from the changes seen in the proposed rule will be less generation of paper waste and a reduced impact on the environment.
The proposed rule will generate some cost savings for businesses and individuals submitting copies of documents to the agency because the agency will only require seven copies or less, as prescribed by the Chief Clerk or General Counsel, of documentation to be provided for commission action instead of 11. The amount of cost savings will depend on the cost of paper, the number of pages to be copied, and the number of requests submitted for commission ruling.
SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT
No adverse fiscal implications are anticipated for small or micro-businesses as a result of the proposed rule. Small and micro-businesses should experience the same cost savings as those experienced by other entities or individuals submitting copies of documents to be considered at a commission meeting.
SMALL BUSINESS REGULATORY FLEXIBILITY ANALYSIS
The commission has reviewed this proposed rulemaking and determined that a small business regulatory flexibility analysis is not required because the proposed rule does not adversely affect a small or micro-business in a material way for the first five years that the proposed rule is in effect. The proposed rule is expected to generate savings for entities or individuals submitting copies of documents to be considered at a commission meeting, although the amount of these savings is not anticipated to be significant.
LOCAL EMPLOYMENT IMPACT STATEMENT
The commission has 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.
REGULATORY IMPACT ANALYSIS DETERMINATION
The commission reviewed the proposed rulemaking in light of the regulatory analysis requirements of the Administrative Procedure Act, Texas Government Code, §2001.001, et seq ., and determined that the proposed 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 intent of the proposed rulemaking is to decrease the number of copies of documents to be considered at a commission meeting as well as define the acronym "SOAH" as "State Office of Administrative Hearings." The changes are not expressly to protect the environment and reduce risks to human health and the environment. Therefore, the commission concludes that the proposed rule does not constitute a major environmental rule. The commission invites public comment on the draft regulatory impact analysis determination.
Furthermore, the proposed rule does not meet any of the four applicability requirements listed in Texas Government Code, §2001.0225(a). Texas Government Code, §2001.0225 applies only to a major environmental rule which: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; (3) exceeds 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) adopts a rule solely under the general powers of the agency instead of under a specific state law.
The proposed rule does not exceed a federal standard because there are no federal standards regulating the number of copies for commission meetings. The proposed rule does not exceed state law requirements because there are no state laws governing this area. Also, the proposed rule does not exceed a requirement of an agreement because there are no delegation agreements or contracts between the State of Texas and an agency or representative of the federal government to implement a state and federal program regarding commission meeting filings. And finally, though this rule is being proposed under the general powers of the agency, it is not a major environmental rule, and would not trigger the fourth applicability requirement.
TAKINGS IMPACT ASSESSMENT
The commission evaluated the proposed rule and performed an assessment of whether this proposed rule constitutes a taking under Texas Government Code, Chapter 2007. The specific purpose of the proposed rule is to update the number of copies required for consideration at a commission meeting as well as define the acronym "SOAH" as "State Office of Administrative Hearings." The proposed rule will substantially advance this stated purpose. Promulgation and enforcement of the proposed rule would be neither a statutory nor a constitutional taking of private real property. Specifically, the proposed regulation does not affect a landowner's rights in private real property because this rulemaking does not burden nor restrict or limit the owner's right to property and reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. In other words, this rule would not constitute a statutory or constitutional taking because there are no burdens imposed on private real property.
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed the proposed rule and found that it is not identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2) or (4), nor will it affect any action/authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11(a)(6). Therefore, the proposed rule is not subject to the Texas Coastal Management Program.
SUBMITTAL OF COMMENTS
Written comments may be submitted to Michael Parrish, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at http://www5.tceq.state.tx.us/rules/ecomments/ . File size restrictions may apply to comments submitted through the eComments system. All comments should reference Rule Project Number 2008-018-001-AS. The comment period closes September 22, 2008. Copies of the proposed rulemaking can be obtained from the commission's Web site at http://www.tceq.state.tx.us/nav/rules/propose_adopt.html . For further information, please contact LaDonna Castañuela, Chief Clerk's Office, (512) 239-3300.
STATUTORY AUTHORITY
The amendment is proposed under Texas Water Code (TWC), §5.013, concerning General Jurisdiction of the Commission; TWC, §5.102, concerning General Powers; TWC, §5.103, concerning Rules; and TWC, §5.105 concerning General Policy.
The proposed amendment implements TWC, §§5.013, 5.102, 5.103, and 5.105.
§1.10.Document Filing Procedures.
(a) All documents to be considered in a commission meeting or by judges in contested cases shall be filed with the chief clerk. Hearing requests and responses shall also be filed with the chief clerk.
(b) If a docket number has been assigned, it should appear on the first page of all filed documents.
(c) Documents shall be filed by United States mail, facsimile, or hand delivery. If a person files a document by facsimile, he or she must file with the chief clerk the appropriate number of copies by mail or hand delivery within three days.
(d) The original or one copy of a document shall be
filed, except for documents to be considered at a commission meeting.
For documents to be considered at a commission meeting, seven
[11] copies
or less, as prescribed by the Chief Clerk or
General Counsel, shall be filed.
(e) The time of filing is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk, or as evidenced by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier.
(f) The chief clerk shall accept all documents presented for filing. The chief clerk's acceptance is not a determination that a document meets filing deadlines or other requirements.
(g) If the requirements of this section are not followed,
the commission, or a judge in a State Office of Administrative
Hearings (SOAH) [SOAH] proceeding, may choose not
to consider the documents. In the absence of a waiver under subsection
(h) of this section, the commission may choose not to consider documents
filed within two days of a commission meeting.
(h) The judge may waive one or more of the requirements of this section, or impose additional filing requirements in SOAH proceedings. The commission or general counsel may waive one or more of the requirements of this section, or impose additional filing requirements for commission meetings.
(i) This section does not apply to offers of evidence during a hearing.
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 August 8, 2008.
TRD-200804154
Robert Martinez
Director, Environmental Law Division
Texas Commission on Environmental Quality
Earliest possible date of adoption: September 21, 2008
For further information, please call: (512) 239-2548
SUBCHAPTER H. EMISSIONS BANKING AND TRADING
DIVISION 4. DISCRETE EMISSION CREDIT BANKING AND TRADING
The Texas Commission on Environmental Quality (TCEQ or commission) proposes amendments to §101.376 and §101.379.
These amendments will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP).
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES
The proposed rulemaking would create an enforceable mechanism that allows the executive director to restrict the use of discrete emissions reduction credits (DERCs) in the Dallas-Fort Worth (DFW) eight-hour ozone nonattainment area to a level consistent with the attainment and maintenance of the National Ambient Air Quality Standard (NAAQS). The amount of DERCs used in the photochemical modeling submitted as part of the May 23, 2007, DFW Eight-Hour Ozone Attainment Demonstration SIP Revision was overly conservative, but consistent with EPA's growth projections guidance, in the assumption that all existing banked DERCs from the DFW area, 20.4 tons per day of nitrogen oxides (NOX ), would be used to increase emissions in 2009. While historically regulated entities in DFW have submitted Notice of Intent to Use Discrete Emission Credits (DEC-2 Forms), no DERCs have ever been used in the region for compliance with the state NOX emission specifications for attainment demonstration. EPA Region 6 has indicated that in order to grant conditional approval of the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard, anticipated to be adopted in December, 2008, the TCEQ would need to adopt an enforceable flow control mechanism to limit the use of DERCs in 2009 and in each subsequent calendar year in which the total amount of DERCs could impact the attainment and maintenance of the NAAQS.
The proposed rulemaking would revise Chapter 101, Subchapter H, Division 4, to specifically grant the executive director the authority to approve the amount of DERCs available for use in any calendar year consistent with attainment and maintenance of the NAAQS. The proposed rulemaking would also change the deadline for the submittal of a DEC-2 Form from 45 days to specify that the forms are due by September 1 of the calendar year immediately prior to the applicable calendar year use period. DEC-2 forms may be submitted after the September 1 deadline but may only be considered after all DEC-2 forms submitted by the September 1 deadline are approved by the executive director, consistent with SIP requirements and the current flow control level. This rulemaking change would allow adequate time for the executive director to determine the amount of available DERCs through an annual review process.
The TCEQ DERC banking and trading program in the DFW eight-hour ozone nonattainment area is a discretionary economic incentive program (EIP) that uses market-based principles to encourage air pollution reductions in the most efficient manner as specified in EPA's guidance document, Improving Air Quality with Economic Incentive Programs, January 2001. In §5.3(c) and §6.4(a), the EPA's EIP guidance document specifies that if the state EIP program is part of a SIP for a nonattainment area, and an annual evaluation identifies there is uncertainty or a potential for the EIP program to create a shortfall or adversely impact the attainment and maintenance of the NAAQS, then the program must include an enforceable commitment to correct the problem as expeditiously as possible. One reconciliation procedure identified to correct a potential SIP deficit is the restriction of banking and trading activities such as flow control or suspending the use of banked emissions. EIP, §16.15 includes safeguards for EIPs with banking provisions, which discusses additional provisions to prevent the EIP from interfering with the attainment and maintenance of the NAAQS. The safeguards specify that EIPs with banking provisions must demonstrate how likely it is that emission spiking would occur, include safeguards in the EIP to prevent emission spiking, and include in the EIP SIP submittal a demonstration showing that banking and trading reductions would not interfere with attainment or maintenance of the NAAQS, or Reasonable Further Progress and Rate of Progress requirements.
The proposed rulemaking would require the executive director to complete an annual review of the submitted DEC-2 Forms to determine the number of DERCs available for potential use in the upcoming calendar year. The number of DERCs available would be developed to ensure noninterference with attainment and maintenance of the NAAQS and would be based on the annual review or on the flow control limit for DERCs prescribed in the most recent SIP adopted by the commission. The annual review would determine the likelihood of emission spiking resulting from the number of potential participants and the amount of DERCs requested for usage.
The flow control limit for a particular year would be determined using the equation in proposed §101.379(c)(2)(A). The flow control limit would be the sum of the 2009 flow control limit in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision plus the estimated emission reductions associated with fleet turnover that are not used to satisfy contingency requirements plus the unused DERCs certified on or after March 1, 2009, and approved for use in the previous calendar year control period that remain unused. This flow control limit design would prevent emission spiking and interference with the attainment and maintenance of the NAAQS from DERC usage.
SECTION BY SECTION DISCUSSION
In addition to the proposed amendments to §101.376 and §101.379 discussed elsewhere in this preamble, the commission also proposes to make various stylistic non-substantive changes to update rule language to current Texas Register style and format requirements, as well as establish more consistency in the rules. Such changes include appropriate and consistent use of acronyms, punctuation, section references, and certain terms such as "must" and "shall." These changes are non-substantive and generally are not specifically discussed in this preamble.
Section 101.376, Discrete Emission Credit Use
The commission proposes §101.376(a)(5), which would allow a user to submit additional DEC-2 Form requests for approval by the executive director if the flow control limit for a particular year of DERCs has not yet been met and all other requirements in §101.376(a) are met.
The commission proposes §101.376(a)(6), which would specify that if the flow control limit in the DFW eight-hour ozone nonattainment area has been met, a user may apply for additional DERCs under the emergency provision in subsection (d)(3).
The commission proposes §101.376(a)(7), which would establish that DERC use must be preceded by executive director approval of a DEC-2 Form.
The commission proposes to revise the amount of discrete emission credits of NOX used by permitted facilities in a 12-month period in §101.376(b)(1)(A) to the numerical "10" instead of the word "ten." The commission also proposes to revise the amount of discrete emission credits for volatile organic compounds used by permitted facilities in a 12-month period in §101.376(b)(1)(A) to the numerical "5" instead of the word "five."
The commission proposes to revise §101.376(c)(4) to use the acronym "DERC" instead of the phrase "discrete emission reduction credit" in order to conform to current Texas Register drafting standards.
The commission proposes to add §101.376(c)(7) to establish that DERCs may not be used in the DFW eight-hour ozone nonattainment area if the DERC usage request exceeds the flow control limit for that year determined by the annual review as specified in §101.379(c).
The commission proposes to revise §101.376(d)(1)(B) to delete deadlines for the submittal of the DEC-2 Forms in order to create distinct regional deadlines. The commission proposes to add §101.376(d)(1)(B)(i) to extend the submittal deadline for DEC-2 Forms in the DFW eight-hour ozone nonattainment area from 45 days to September 1 of the calendar year immediately prior to the applicable calendar year use period. This extension provides the executive director with the time required to review the total amount of DERCs included in the DEC-2 Forms submitted and to perform the annual review specified in §101.379(c) to determine the appropriate level of DERC flow control consistent with attainment and maintenance of the NAAQS. The commission proposes §101.376(d)(1)(B)(ii) to specify the submittal deadlines for discrete emission credits for use in all other areas as previously contained in §101.376(d)(1)(B).
The commission proposes to revise §101.376(d)(3) by changing "notice late" to "late DEC-2 Form" to clarify that the DEC-2 Form is the notice that may be submitted late in the case of an emergency.
The commission proposes to delete §101.376(e)(3)(B) and revise §101.376(e)(3)(A) to include the deleted language specifying that the DERC use period must not exceed 12 months. As a result of these changes, the commission proposes to reformat §101.376(e)(3)(C) to §101.376(e)(3)(B).
The commission proposes §101.376(f) to establish provisions for the executive director to apportion the amount of DERCs for each control period, as determined by the annual review, for the DFW eight-hour ozone nonattainment area. Proposed §101.376(f)(1) would specify that if the total number of DERCs submitted for the upcoming control period in all DEC-2 Forms received by the deadline is greater than the limit determined by the current annual review, the executive director would apportion the number of DERCs for use. Proposed §101.376(f)(1)(A) specifies the executive director would consider the appropriate amount of DERCs allocated for each DEC-2 Form submitted on a case-by-case basis. In determining the amount of DERCs to approve for each DEC-2 Form application, the executive director would take into consideration the provisions specified in proposed §101.376(f)(1)(A)(i) to (v). These provisions include the total number of DERCs existing in the nonattainment area bank; the total number of DERCs submitted for use in the upcoming control period; the proportion of DERCs requested for use to the total amount requested; the amount of DERCs required by the applicant for compliance with the eight-hour emission specifications; and the technological and economic aspects of other compliance options available to the applicant.
The commission proposes §101.376(f)(1)(B), which would establish that any credits requested for use by the applicant in the DEC-2 Form that were certified by the executive director after March 1, 2009, would be included in the flow control limit determined by the annual review process, detailed later in this preamble, and approved for use by the executive director for any subsequent control period.
The commission proposes §101.376(f)(2), which would establish that if the total number of DERCs submitted for use is less than the flow control limit determined according to the annual review, the executive director may approve all requests for DERC usage provided that all other requirements of this section are met.
Section 101.379, Program Audits and Reports
The commission proposes to amend §101.379(b), which would clarify that the report due to the general public and the EPA by February 1 of each year would contain information regarding DERC generation and use from the previous calendar year control period. In addition, proposed language would require the report include the amount of DERCs approved for use under proposed §101.379(c).
The commission proposes §101.379(c), which would establish that no later than November 1 of each year, the executive director would complete and make available to the public an annual review that determines the number of DERCs available for use in DFW under the flow control limit for the upcoming calendar year. The number of DERCs available would be developed to ensure noninterference with attainment and maintenance of the NAAQS for each calendar year beginning in 2009.
The commission proposes §101.379(c)(1), which would specify that for the 2009 control period, the flow control limit for DERCs available for use would be the number prescribed in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard.
For each following calendar year after 2009, the annual review would set the flow control limit for that year using the equation in proposed §101.379(c)(2)(A). The equation calculates the flow control limit using variable "B" as the 2009 flow control limit prescribed in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard; variable "C1 " is the estimated emission reductions associated with fleet turnover from mobile sources during the previous calendar year control period; variable "C2" is the emission reduction associated with the contingency requirement for the current control period; variable "D1" is the DERCs certified on or after March 1, 2009, and approved for use in the previous calendar year control period; variable "D2 " is the DERCs certified on or after March 1, 2009, and used in the previous calendar year control period; and variable "E" is DERCs certified before March 1, 2009, and approved for use in the previous calendar year control period that remain unused.
The commission proposes §101.379(c)(2)(B), which would specify that if the flow control limit, as calculated in the equation in subparagraph (A), is greater than the number of DERCs available in the bank, then flow control is not necessary, and the annual review would set the number of DERCs potentially available for use as the total number of DERCs in the bank. The commission proposes §101.379(c)(2)(C) to specify that if use of the entire DERC bank would not interfere with attainment and maintenance of the eight-hour ozone NAAQS in the DFW eight-hour ozone nonattainment area, then the number of DERCs potentially available for use is the total number of DERCs in the bank. The commission proposes §101.379(c)(2)(D) to specify that if the flow control limit for a particular year, as calculated in the equation in subparagraph (A), is greater than the total number of DERCs requested for use in accordance with §101.376(d), then flow control is not necessary.
FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT
Nina Chamness, Analyst, Strategic Planning and Assessment, has determined that, for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency or other units of state or local governments as a result of administration or enforcement of the proposed rules. The agency would utilize existing resources to implement the proposed rules. The proposed rules would affect the use of DERCs in the DFW eight-hour ozone nonattainment area. Local governments in the DFW eight-hour ozone nonattainment area are not expected to be impacted since they typically do not generate or use DERCs.
Historically, the only NOX DERC trade in the DFW eight-hour ozone nonattainment area was between portfolios within the same business entity. Therefore, no market price has been established for the economic value of DERCs in the DFW eight-hour ozone nonattainment area, and the fiscal effect of the proposed rules can not be determined at this time. However, the estimated capital cost to install selective catalytic reduction (SCR) controls in the DFW eight-hour ozone nonattainment area to control NOX emissions would average approximately $2,000 per ton of NOX reduced. Costs could be as much as $50 million per regulated entity for those entities most likely to be affected by the proposed rules. It is not expected that the proposed rules would cause a regulated entity to incur this much in capital expenditures, but facilities may be faced with some increased capital expenditures if the executive director is required to restrict the use of DERCs in the DFW eight-hour ozone nonattainment area if ozone attainment standards for the area cannot be met.
PUBLIC BENEFITS AND COSTS
Nina Chamness also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the changes seen in the proposed rules would be increased protection of public health and the environment.
Two utility electric generation sources operating in the DFW eight-hour ozone nonattainment area own DERCs at this time. If these entities, or any others, plan to utilize these DERCs, they would have to give the executive director additional notice under the proposed rules by meeting a September 1 deadline instead of 45 days notice. The market price of DERCs is not known at this time since no market activity has taken place, and the value of DERCs in the DFW eight-hour ozone nonattainment area is not known. However, the estimated capital cost to install SCR in the DFW eight-hour ozone nonattainment area to control NOX emissions would average $2,000 per ton of NOX reduced. Costs could be as much as $50 million per regulated entity if the use of DERCs must be restricted.
SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT
No adverse fiscal implications are anticipated for small or micro-businesses in the DFW eight-hour ozone nonattainment area. Small or micro-businesses do not typically own DERCs since they do not typically participate in the activities that would generate them. If a small or micro-business becomes the owner of DERCs, it could expect to be subject to the same conditions as a large business. A small or micro-business would have to meet the same notice deadline and be subject to the executive director's authority to restrict the use of DERCs in the DFW eight-hour ozone nonattainment area to a level consistent with attainment and maintenance of the NAAQS.
SMALL BUSINESS REGULATORY FLEXIBILITY ANALYSIS
The commission has reviewed this proposed rulemaking and determined that a small business regulatory flexibility analysis is not required because the proposed rules are not expected to have adverse impacts on a small or micro-business in a material way for the first five years that the proposed rules are in effect. Small or micro-businesses in the DFW eight-hour ozone nonattainment area typically do not own DERCs, and staff does not expect any of them to become subject to the provisions of the proposed rules.
LOCAL EMPLOYMENT IMPACT STATEMENT
The commission has 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 impact analysis requirements of Texas Government Code, §2001.0225, and determined that the proposed rulemaking action does meet the definition of a "major environmental rule" as defined in that statute. A "major environmental rule" is a rule, the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed amendments to Chapter 101 and revisions to the SIP add an enforceable mechanism to allow the executive director to restrict the use of DERCs in the DFW eight-hour ozone nonattainment area and change the deadlines to submit a DEC-2 Form. The proposed control mechanism is a flow control strategy that potentially limits the use of DERCs on an annual basis in the DFW eight-hour ozone nonattainment area. The proposed amendments are necessary to ensure that potential use of DERCs would not interfere with attainment and maintenance of the NAAQS. The proposed rulemaking may potentially prohibit and limit the use and trading of DERCs in the DFW eight-hour ozone nonattainment area.
This rulemaking does not meet any of the four applicability criteria of a "major environmental rule" as defined in the Texas Government Code. Texas Government Code, §2001.0225 applies only to a major environmental rule, the result of which is to: (1) exceed a standard set by federal law, unless the rule is specifically required by state law; (2) exceed an express requirement of state law, unless the rule is specifically required by federal law; (3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or (4) adopt a rule solely under the general powers of the agency instead of under a specific state law. Specifically, the proposed amendments were developed to provide a flow control mechanism for the DERC program in the DFW eight-hour ozone nonattainment area, and to ensure that potential use of DERCs would not interfere with attainment and maintenance of the NAAQS. This flow control mechanism is developed in accordance with the Improving Air Quality with Economic Incentive Programs of the January 2001 document. The proposed rulemaking does not exceed an express requirement of federal or state law or a requirement of a delegation agreement, and was not developed solely under the general powers of the agency, but was specifically developed under federal law and authorized under the Texas Health and Safety Code (THSC).
The rulemaking implements requirements of 42 United States Code (USC), §7410, which requires states to adopt a SIP that provides for "implementation, maintenance, and enforcement" of the NAAQS in each air quality control region of the state. While 42 USC, §7410 does not require specific programs, methods, or reductions to meet the standard, a SIP must include "enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements of this chapter," (meaning 42 USC, Chapter 85, Air Pollution Prevention and Control). It is true that the Federal Clean Air Act (FCAA) does require some specific measures for SIP purposes, such as the inspection and maintenance program, but those programs are the exception, not the rule, in the SIP structure of 42 USC, §7410. The provisions of the FCAA recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public to collaborate on the best methods to attain the NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a state from developing a program that meets the requirements of 42 USC, §7410. Thus, while specific measures are not generally required, the emission reductions are required. States are not free to ignore the requirements of 42 USC, §7410, and must develop programs to assure that the nonattainment areas of the state would be brought into attainment on schedule. The proposed amendments are necessary to ensure that the DERC program does not interfere with attainment or maintenance of the NAAQS in the DFW eight-hour ozone nonattainment area.
The requirement to provide a fiscal analysis of adopted regulations in the Texas Government Code was amended by SB 633 during the 75th Legislature, 1997. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis of extraordinary rules. These are identified in the statutory language as major environmental rules that would have a material adverse impact and would exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding that this requirement would seldom apply, the commission provided a cost estimate for SB 633 that concluded "based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill would have significant fiscal implications for the agency due to its limited application."
The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted proposed rules from the full analysis unless the rule was a major environmental rule that exceeds a federal law. As discussed earlier in this preamble, 42 USC, §7410 does not require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to ensure that area would meet the attainment deadlines. Because of the ongoing need to address nonattainment issues, the commission routinely proposes and adopts SIP rules. The legislature is presumed to understand this federal scheme. If each rule proposed for inclusion in the SIP was considered to be a major environmental rule that exceeds federal law, then every SIP rule would require the full regulatory impact analysis contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board in its fiscal notes. Because the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the Legislative Budget Board, the commission contends that the intent of SB 633 was only to require the full regulatory impact analysis for rules that are extraordinary in nature. While the SIP rules would have a broad impact, that impact is no greater than is necessary or appropriate to meet the requirements of 42 USC, §7410. For these reasons, rules adopted for inclusion in the SIP fall under the exception in Texas Government Code, §2001.0225(a), because they are specifically required by federal law.
In addition, 42 USC, §7502(a)(2) requires attainment as expeditiously as practicable, and 42 USC, §7511(a), requires states to submit ozone attainment demonstration SIPs for ozone nonattainment areas such as the DFW eight-hour ozone nonattainment area. As discussed earlier in this preamble, the proposed rules would ensure that use of DERCs in the DFW eight-hour ozone nonattainment area would not interfere with the attainment and maintenance of the air quality standards established under federal law as NAAQS.
The commission has consistently applied this construction to its rules since this statute was enacted in 1997. Since that time, the legislature has revised the Texas Government Code but left this provision substantially unchanged. The commission presumes that "when an agency interpretation is in effect at the time the legislature amends the laws without making substantial change in the statute, the legislature is deemed to have accepted the agency's interpretation." Central Power & Light Co. v. Sharp, 919 S.W.2d 485, 489 (Tex. App. Austin 1995), writ denied with per curiam opinion respecting another issue, 960 S.W.2d 617 (Tex. 1997); Bullock v. Marathon Oil Co. , 798 S.W.2d 353, 357 (Tex. App. Austin 1990), no writ; Cf. Humble Oil & Refining Co. v. Calvert, 414 S.W.2d 172 (Tex. 1967); Sharp v. House of Lloyd, Inc., 815 S.W.2d 245 (Tex. 1991); Southwestern Life Ins. Co. v. Montemayor , 24 S.W.3d 581 (Tex. App. Austin 2000), pet. denied; and Coastal Indust. Water Auth. v. Trinity Portland Cement Div., 563 S.W.2d 916 (Tex. 1978).
As discussed, this rulemaking implements requirements of 42 USC, §7410. There is no contract or delegation agreement that covers the topic that is the subject of this action. Therefore, the rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law, exceed a requirement of a delegation agreement, nor is it adopted solely under the general powers of the agency. Finally, this rulemaking was not developed solely under the general powers of the agency, but is authorized by specific sections of THSC, Chapter 382, Texas Clean Air Act (TCAA), and Texas Water Code (TWC) that are cited in the STATUTORY AUTHORITY section of this preamble, including THSC, §§382.002, 382.011, 382.012, 382.014, 382.016, and 382.017. Therefore, this rulemaking action is not subject to the regulatory analysis provisions of Texas Government Code, §2001.0225(b), because the rulemaking does not meet any of the four applicability requirements. The commission invites public comment regarding the draft regulatory impact analysis determination during the public comment period.
TAKINGS IMPACT ASSESSMENT
The commission completed a takings impact assessment for this rulemaking action under Texas Government Code, §2007.043. The primary purpose of the rulemaking is to add an enforceable flow control process to the DERC program in the DFW eight-hour ozone nonattainment area, so that the use of DERCs would not interfere with the attainment and maintenance of the ozone NAAQS in the DFW eight-hour ozone nonattainment area. Promulgation and enforcement of the amendments would not burden private real property. The rules do not affect private property in a manner that restricts or limits an owner's right to the property that would otherwise exist in the absence of a governmental action. Additionally, the credits that would be affected by these rules are not property rights (§101.372(j)). Because DERCs are not property, limiting the use of DERCs does not constitute a taking. Consequently, this rulemaking action does not meet the definition of a takings under Texas Government Code, §2007.002(5).
Additionally, Texas Government Code, §2007.003(b)(4) provides that Chapter 2007 does not apply to this rulemaking action because it is reasonably taken to fulfill an obligation mandated by federal law. The changes to the use of DERCs within the DFW eight-hour ozone nonattainment area that are proposed by these rules were developed to ensure that the use of DERCs would not interfere with attainment and maintenance of NAAQS set by the EPA under 42 USC, §7409. States are primarily responsible for ensuring attainment and maintenance of NAAQS once the EPA has established them. Under 42 USC, §7410, and related provisions, states must submit, for approval by the EPA, SIPs that provide for the attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, one purpose of this rulemaking action is to meet the air quality standards established under federal law as NAAQS. However, this rulemaking is only one step among many necessary for attaining the ozone NAAQS.
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 would, therefore, require that goals and policies of the Texas Coastal Management Program (CMP) be considered during the rulemaking process. The commission reviewed this proposed rulemaking for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined that the proposed amendments are consistent with CMP goals and policies. The CMP goal applicable to this rulemaking action is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas (31 TAC §501.12(1)). No new sources of air contaminants would be authorized and the revisions would maintain the same level of emissions control as previous rules. The CMP policy applicable to this rulemaking action is the policy that the commission's rules comply with federal regulations in 40 Code of Federal Regulations, to protect and enhance air quality in the coastal areas (31 TAC §501.14(q)). This rulemaking action complies with 40 Code of Federal Regulations Part 51, Requirements for Preparation, Adoption, and Submittal of Implementation Plans. Therefore, in accordance with 31 TAC §505.22(e), the commission affirms that this rulemaking action is consistent with 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.
EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING PERMITS PROGRAM
Chapter 101, Subchapter H is an applicable requirement under 30 TAC Chapter 122, Federal Operating Permits Program. If the proposed amendments to Chapter 101, Subchapter H are adopted, owners or operators subject to the Federal Operating Permits Program must, consistent with the revision process in Chapter 122, upon the effective date of the rulemaking, revise their operating permit to include the new Chapter 101, Subchapter H requirements.
ANNOUNCEMENT OF HEARING
Public hearings for this proposed rulemaking have been scheduled on September 9, 2008, at 6:30 p.m. in the J. Erik Jonsson Central Library Auditorium, 1515 Young Street, Dallas, and on September 10, 2008, at 10:00 a.m. in the Arlington City Hall Council Chambers, 101 W. Abram Street, Arlington. The hearings are structured for the receipt of oral or written comments by interested persons. Registration will begin 30 minutes prior to the hearings. Individuals may present oral statements when called upon in order of registration. A time limit may be established at each hearing to assure that enough time is allowed for every interested person to speak. There will be no open discussion during the hearings; however, commission staff members will be available to discuss the proposals 30 minutes before each hearing.
Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact Joyce Spencer, Air Quality Division at (512) 239-5017. Requests should be made as far in advance as possible.
SUBMITTAL OF COMMENTS
Written comments may be submitted to Kristin Smith, MC-205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at: http://www5.tceq.state.tx.us/rules/ecomments/ . File size restrictions may apply to comments being submitted via the eComments system. All comments should reference Rule Project Number 2008-011-101-EN. The comment period closes September 12, 2008. Copies of the proposed rulemaking can be obtained from the commission's Web site at http://www.tceq.state.tx.us/nav/rules/propose_adopt.html . For further information, please contact Luke Baine, Air Quality Division, Stationary Source Programs Team, (512) 239-5856.
STATUTORY AUTHORITY
The amendments are proposed under Texas Water Code (TWC), §5.102, concerning General Powers, §5.103, concerning Rules, and §5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the TWC. In addition, the amendment is proposed under Texas Health and Safety Code (THSC), §382.002, concerning Policy and Purpose, which states the policy and purpose of the State of Texas and the Texas Clean Air Act (TCAA); §382.011, concerning General Powers and Duties, which provides the commission with the authority to establish the level of quality to be maintained in the state's air and the authority to control the quality of the state's air; §382.012, concerning the State Air Control Plan, which requires the commission to develop plans for protection of the state's air; §382.014, concerning Emission Inventory, which authorizes the commission to require submission information relating to emissions of air contaminants; §382.016, concerning Monitoring Requirements; Examination of Records, which authorizes the commission to prescribe requirements for owners or operators of sources to make and maintain records of emissions measurements; §382.017, concerning Rules, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; §382.021, concerning Sampling Methods and Procedures, which authorizes the commission to prescribe the sampling methods and procedures; and §382.051(d), concerning Permitting Authority of Commission Rules, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits under Chapter 382. In addition, amendment is proposed under federal mandates contained in 42 United States Code, §§7410 et seq ., which require states to adopt pollution control measures in order to reach specific air quality standards in particular areas of the state.
The proposed amendments implement THSC, §§382.002, 382.011, 382.012, 382.016, 382.021, and 382.051(d).
§101.376.Discrete Emission Credit Use.
(a) Requirements to use discrete emission credits. Discrete emission credits may be used if the following requirements are met.
(1) The user shall have ownership of a sufficient amount of discrete emission credits before the use period for which the specific discrete emission credits are to be used.
(2) The user shall hold sufficient discrete emission credits to cover the user's compliance obligation at all times.
(3) The user shall acquire additional discrete emission credits during the use period if it is determined the user does not possess enough discrete emission credits to cover the entire use period. The user shall acquire additional credits as allowed under this section prior to the shortfall, or be in violation of this section.
(4) Facility or mobile source operators may acquire and use only discrete emission credits listed on the registry.
(5) In the Dallas-Fort Worth (DFW) eight-hour ozone nonattainment area as defined in §101.1 of this title (relating to Definitions), if the flow control limit for a particular year of discrete emission reduction credits (DERC), as determined by the annual review in §101.379(c) of this title (relating to Program Audits and Reports) has not yet been met, a user may submit additional Notice of Intent to Use Discrete Emission Credits (DEC-2 Form) requests, which the executive director may approve, if all other requirements of this section are met.
(6) If the flow control limit in the DFW eight-hour ozone nonattainment area as established in §101.379(c)(2)(A) of this title has been met, a user may only apply for additional DERCs under the emergency provision in subsection (d)(3) of this section.
(7) The executive director has approved the intent to use as prescribed in subsection (f)(1) of this section.
(b) Use of discrete emission credits. With the exception of uses prohibited in subsection (c) of this section or precluded by commission order or condition within an authorization under the same commission account number, discrete emission credits may be used to meet or demonstrate compliance with any facility or mobile regulatory requirement including the following:
(1) to exceed any allowable emission level, if the following conditions are met:
(A) in ozone nonattainment areas, permitted facilities
may use discrete emission credits to exceed permit allowables by no
more than 10 [ten] tons for nitrogen oxides
or 5 [five
] tons for volatile organic compounds
in a 12-month period as approved by the executive director. This use
is limited to one exceedance, up to 12 months within any 24-month
period, per use strategy. The user shall demonstrate that there will
be no adverse impacts from the use of discrete emission credits at
the levels requested; or
(B) at permitted facilities in counties or portions of counties designated as attainment or unclassified, discrete emission credits may be used to exceed permit allowables by values not to exceed the prevention of significant deterioration significance levels as provided in 40 Code of Federal Regulations (CFR) §52.21(b)(23), as approved by the executive director prior to use. This use is limited to one exceedance, up to 12 months within any 24-month period, per use strategy. The user shall demonstrate that there will be no adverse impacts from the use of discrete emission credits at the levels requested;
(2) as new source review (NSR) permit offsets, if the following requirements are met:
(A) the user shall obtain the executive director's approval prior to the use of specific discrete emission credits to cover, at a minimum, one year of operation of the new or modified facility in the NSR permit;
(B) the amount of discrete emission credits needed for NSR offsets equals the quantity of tons needed to achieve the maximum allowable emission level set in the user's NSR permit. The user shall also purchase and retire enough discrete emission credits to meet the offset ratio requirement in the user's ozone nonattainment area. The user shall purchase and retire either the environmental contribution of 10% or the offset ratio, whichever is higher; and
(C) the NSR permit must meet the following requirements:
(i) the permit must contain an enforceable requirement that the facility obtain at least one additional year of offsets before continuing operation in each subsequent year;
(ii) prior to issuance of the permit the user shall identify the discrete emission credits; and
(iii) prior to start of operation the user shall submit
a completed DEC-2 Form, [
Notice of Intent to Use Discrete Emission Credits
] along with the original certificate;
(3) to comply with the Mass Emissions Cap and Trade Program requirements as provided in §101.356(g) of this title (relating to Allowance Banking and Trading); or
(4) to comply with Chapters 114, 115, and 117 of this title (relating to Control of Air Pollution from Motor Vehicles; Control of Air Pollution from Volatile Organic Compounds; and Control of Air Pollution from Nitrogen Compounds), as allowed.
(c) Discrete emission credit use prohibitions. A discrete emission credit may not be used under this division:
(1) before it has been acquired by the user;
(2) for netting to avoid the applicability of federal and state NSR requirements;
(3) to meet (as codified in 42 United States Code (USC), Federal Clean Air Act (FCAA)) requirements for:
(A) new source performance standards under FCAA, §111 (42 USC, §7411);
(B) lowest achievable emission rate standards under FCAA, §173(a)(2) (42 USC, §7503(a)(2));
(C) best available control technology standards under FCAA, §165(a)(4) (42 USC, §7475(a)(4)) or Texas Health and Safety Code, §382.0518(b)(1);
(D) hazardous air pollutants standards under FCAA, §112 (42 USC, §7412), including the requirements for maximum achievable control technology;
(E) standards for solid waste combustion under FCAA, §129 (42 USC, §7429);
(F) requirements for a vehicle inspection and maintenance program under FCAA, §182(b)(4) or (c)(3) (42 USC, §7511a(b)(4) or (c)(3));
(G) ozone control standards set under FCAA, §183(e) and (f) (42 USC, §7511b(e) and (f));
(H) clean-fueled vehicle requirements under FCAA, §246 (42 USC, §7586);
(I) motor vehicle emissions standards under FCAA, §202 (42 USC, §7521);
(J) standards for non-road vehicles under FCAA, §213 (42 USC, §7547);
(K) requirements for reformulated gasoline under FCAA, §211(k) (42 USC, §7545); or
(L) requirements for Reid vapor pressure standards under FCAA, §211(h) and (i) (42 USC, §7545(h) and (i));
(4) to allow an emissions increase of an air contaminant
above a level authorized in a permit or other authorization that exceeds
the limitations of §106.261 or §106.262 of this title (relating
to Facilities (Emission Limitations); and Facilities (Emission and
Distance Limitations)) except as approved by the executive director
and the United States Environmental Protection Agency. This paragraph
does not apply to limit the use of DERC [discrete
emission reduction credits (DERC)] or mobile DERC [
discrete emission reduction credits
] in lieu of allowances under §101.356(h) of this title;
(5) to authorize a facility whose emissions are enforceably
limited to below applicable major source threshold levels, as defined
in §122.10 of this title (relating to General Definitions), to
operate with actual emissions above those levels without triggering
applicable requirements that would otherwise be triggered by such
major source status; [or]
(6) to exceed an allowable emission level where the
exceedance would cause or contribute to a condition of air pollution
as determined by the executive director; or [.]
(7) in the DFW eight-hour ozone nonattainment area, if the DERC usage requested exceeds the flow control limit for a particular year determined by the annual review as specified in §101.379(c) of this title.
(d) Notice of intent to use.
(1) A completed DEC-2 Form, signed by an authorized
representative of the applicant, must [shall]
be submitted to the executive director in accordance with the following
requirements.
(A) Discrete emission credits may be used only after the applicant has submitted the notice and received executive director approval.
(B) The application must be submitted: [at
least 45 days prior to the first day of the use period if the discrete
emission credits were generated from a facility, 90 days if the discrete
emission credits were generated from a mobile source, and every 12
months thereafter for each subsequent year if the use period exceeds
12 months.]
(i) for DERC use in the DFW eight-hour ozone nonattainment area as defined in §101.1 of this title, no later than September 1 prior to the beginning of the calendar year that the DERCs are intended for use; and
(ii) for all other discrete emission credit use, at least 45 days prior to the first day of the use period if the discrete emission credits were generated from a facility, 90 days if the discrete emission credits were generated from a mobile source, and every 12 months thereafter for each subsequent year if the use period exceeds 12 months.
(C) A copy of the application must [shall]
also be sent to the federal land manager 30 days prior to use if the
user is located within 100 kilometers of a Class I area, as listed
in 40 CFR Part 81 (2001).
(D) The application must include, but is not limited to, the following information for each use:
(i) the applicable state and federal requirements that the discrete emission credits will be used to comply with and the intended use period;
(ii) the amount of discrete emission credits needed;
(iii) the baseline emission rate, activity level, and total emissions for the applicable facility or mobile source;
(iv) the actual emission rate, activity level, and total emissions for the applicable facility or mobile source;
(v) the most stringent emission rate and the most stringent emission level for the applicable facility or mobile source, considering all applicable regulatory requirements;
(vi) a complete description of the protocol, as submitted by the executive director to the United States Environmental Protection Agency for approval, used to calculate the amount of discrete emission credits needed;
(vii) the actual calculations performed by the user to determine the amount of discrete emission credits needed;
(viii) the date that the discrete emission credits were acquired or will be acquired;
(ix) the discrete emission credit generator and the original certificate of the discrete emission credits acquired or to be acquired;
(x) the price of the discrete emission credits acquired or the expected price of the discrete emission credits to be acquired, except for transfers between sites under common ownership or control;
(xi) a statement that due diligence was taken to verify that the discrete emission credits were not previously used, the discrete emission credits were not generated as a result of actions prohibited under this regulation, and the discrete emission credits will not be used in a manner prohibited under this regulation; and
(xii) a certification of use, that must contain certification under penalty of law by a responsible official of the user of truth, accuracy, and completeness. This certification must state that based on information and belief formed after reasonable inquiry, the statements and information in the document are true, accurate, and complete.
(2) DERC use calculation.
(A) To calculate the amount of discrete emission credits necessary to comply with §§117.123, 117.223, 117.320, 117.323, 117.423, 117.1020, 117.1120, 117.1220, or 117.3020 of this title (relating to Source Cap; and System Cap), a user may use the equations listed in those sections, or the following equations.
(i) For the rolling average cap:
Figure: 30 TAC §101.376(d)(2)(A)(i) (No change.)
(ii) For maximum daily cap:
Figure: 30 TAC §101.376(d)(2)(A)(ii) (No change.)
(B) The amount of discrete emission credits needed to demonstrate compliance or meet a regulatory requirement is calculated as follows.
Figure: 30 TAC §101.376(d)(2)(B) (No change.)
(C) The amount of discrete emission credits needed to exceed an allowable emissions level is calculated as follows.
Figure: 30 TAC §101.376(d)(2)(C) (No change.)
(D) The user shall retire 10% more discrete emission credits than are needed, as calculated in this paragraph, to ensure that the facility or mobile source environmental contribution retirement obligation will be met.
(E) If the amount of discrete emission credits needed to meet a regulatory requirement or to demonstrate compliance is greater than 10 tons, an additional 5.0% of the discrete emission credits needed, as calculated in this paragraph, must be acquired to ensure that sufficient discrete emission credits are available to the user with an adequate compliance margin.
(3) A user may submit a late DEC-2 Form [notice late
] in the case of an emergency, but the notice must be submitted
before the discrete emission credits can be used. The user shall include
a complete description of the emergency situation in the notice of
intent to use. All other notices submitted less than 45 days prior
to use, or 90 days prior to use for a mobile source, will be considered
late and in violation.
(4) The user is responsible for determining the credits it will purchase and notifying the executive director of the selected generating facility or mobile source in the notice of intent to use. If the generator's credits are rejected or the notice of generation is incomplete, the use of discrete emission credits by the user may be delayed by the executive director. The user cannot use any discrete emission credits that have not been certified by the executive director. The executive director may reject the use of discrete emission credits by a facility or mobile source if the credit and use cannot be demonstrated to meet the requirements of this section.
(5) If the facility is in an area with an ozone season less than 12 months, the user shall calculate the amount of discrete emission credits needed for the ozone season separately from the non-ozone season.
(e) Notice of use.
(1) The user shall calculate:
(A) the amount of discrete emission credits used, including the amount of discrete emission credits retired to cover the environmental contribution, as described in subsection (d)(2)(C) of this section, associated with actual use; and
(B) the amount of discrete emission credits not used, including the amount of excess discrete emission credits that were purchased to cover the environmental contribution, as described in subsection (d)(2)(C) of this section, but not associated with the actual use, and available for future use.
(2) DERC use is calculated by the following equations.
(A) The amount of discrete emission credits used to demonstrate compliance or meet a regulatory requirement is calculated as follows.
Figure: 30 TAC §101.376(e)(2)(A) (No change.)
(B) The amount of discrete emission credits used to comply with permit allowables is calculated as follows.
Figure: 30 TAC §101.376(e)(2)(B) (No change.)
(3) A DEC-3 Form, Notice of Use of Discrete Emission
Credits, must [shall] be submitted to the commission
in accordance with the following requirements.
(A) The notice must be submitted within 90 days after the end of the use period. Each use period must not exceed 12 months.
[(B) The notice must be
submitted within 90 days of the conclusion of each 12-month use period,
if applicable.]
(B) [(C)] The notice is to be
used as the mechanism to update or amend the notice of intent to use
and must include any information different from that reported in the
notice of intent to use, including, but not limited to, the following items:
(i) purchase price of the discrete emission credits obtained prior to the current use period, except for transfers between sites under common ownership or control;
(ii) the actual amount of discrete emission credits possessed during the use period;
(iii) the actual emissions during the use period for volatile organic compounds and nitrogen oxides;
(iv) the actual amount of discrete emission credits used;
(v) the actual environmental contribution; and
(vi) the amount of discrete emission credits available for future use.
(4) Discrete emission credits that are not used during the use period are surplus and remain available for transfer or use by the holder. In addition, any portion of the calculated environmental contribution not attributed to actual use is also available.
(5) The user is in violation of this section if the user submits the report of use later than the allowed 90 days following the conclusion of the use period.
(f) DFW eight-hour ozone nonattainment area DERC usage.
(1) If the total number of DERCs submitted for the upcoming control period in all DEC-2 Forms received by the deadline in subsection (d)(1)(B)(i) of this section is greater than the flow control limit determined by the annual review specified in §101.379(c) of this title, applicable to the control period specified in the DEC-2 Form, the executive director shall apportion the number of DERCs for use.
(A) The executive director shall consider the appropriate amount of DERCs allocated for each DEC-2 application submitted on a case-by-case basis. In determining the amount of DERC use to approve for each DEC-2 application, the executive director may take into consideration:
(i) the total number of DERCs existing in the nonattainment area bank;
(ii) the total number of DERCs submitted for use in the upcoming control period;
(iii) the proportion of DERCs requested for use to the total amount requested;
(iv) the amount of DERCs required by the applicant for compliance; and
(v) the technological and economic aspects of other compliance options available to the applicant.
(B) Any credits requested for use by the applicant in the DEC-2 Form that were certified by the executive director after March 1, 2009, will be applied to the flow control limit determined by the annual review as specified in §101.379(c) of this title and approved for use by the executive director for any subsequent control period.
(2) If the total number of DERCs submitted for use is less than the flow control limit for that particular year determined according to the annual review specified in §101.379(c) of this title, the executive director may approve all requests for DERC usage provided that all other requirements of this section are met.
§101.379.Program Audits and Reports.
(a) No later than three years after the effective date of this section, and every three years thereafter, the executive director will audit this program.
(1) The audit will evaluate the timing of credit generation and use, the impact of the program on the state's attainment demonstration and the emissions of hazardous air pollutants, the availability and cost of credits, compliance by the participants, and any other elements the executive director may choose to include.
(2) The executive director will recommend measures to remedy any problems identified in the audit. The trading of discrete emission credits may be discontinued by the executive director in part or in whole and in any manner, with commission approval, as a remedy for problems identified in the program audit.
(3) The audit data and results will be completed and
submitted to the United States Environmental Protection Agency
[EPA
] and made available for public inspection within six months
after the audit begins.
(b) No later than February 1 of each calendar year,
the executive director shall develop and make available to the general
public and the United States Environmental Protection Agency [
EPA] a report that includes the following information for the
previous calendar year:
(1) the amount of each pollutant emission credits generated under this division;
(2) the amount of each pollutant emission credits used
under this division; [and]
(3) a summary of all trades completed under this division
; and[.]
(4) the amount of discrete emission reduction credit (DERC) approved for use under subsection (c) of this section.
(c) No later than November 1 of each year, the executive director will complete, and make available to the general public and the Environmental Protection Agency, an annual review to determine the number of DERCs available for potential use in the upcoming calendar year for the Dallas-Fort Worth (DFW) eight-hour ozone nonattainment area. The number of DERCs available for use will be calculated based on the technical analysis to ensure noninterference with attainment and maintenance of the ozone National Ambient Air Quality Standard (NAAQS) and will be based on the annual review, or on the flow control limit for DERCs prescribed in the most recent state implementation plan (SIP) adopted by the commission.
(1) For the 2009 control period, the flow control limit for DERCs available for use is the number prescribed in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard.
(2) For any control period after 2009, the annual review will establish a flow control limit for that year.
(A) The flow control limit for a particular year will be determined using the following equation:
Figure: 30 TAC §101.379(c)(2)(A)
(B) If the flow control limit, as calculated in the equation in subparagraph (A) of this paragraph, is greater than the number of DERCs available in the bank, then flow control is not necessary, and the annual review will set the number of DERCs potentially available for use as the total number of DERCs in the bank.
(C) If use of the entire DERC bank would not interfere with attainment and maintenance of the eight-hour ozone NAAQS in the DFW eight-hour ozone nonattainment area, then the number of DERCs potentially available for use is the total number of DERCs in the bank.
(D) If the flow control limit, as calculated in the equation in subparagraph (A) of this paragraph, is greater than the total number of DERCs requested for use in accordance with §101.376(d) of this title (relating to Discrete Emission Credit Use), then flow control is not necessary.
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 August 8, 2008.
TRD-200804139
Robert Martinez
Director, Environmental Law Division
Texas Commission on Environmental Quality
Earliest possible date of adoption: September 21, 2008
For further information, please call: (512) 239-0177
The Texas Commission on Environmental Quality (agency or commission) proposes amendments to §291.3 and §291.144; and proposes new §291.147.
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES
In 2007, the 80th Legislature passed House Bill (HB) 149, relating to water utilities. HB 149 amended Texas Water Code (TWC), Chapter 13, Subchapter C, by adding §13.046, which requires the commission by rule to provide a streamlined process to allow the retail public utility that takes over the nonfunctioning retail water or sewer utility to apply for a ruling on the reasonableness of the newly implemented rates. The bill further requires the commission to establish, in consultation with the utility, a reasonable amount of time for the retail public utility to bring the water or wastewater system into compliance, and prohibits the commission from imposing a penalty during this period for any violation that existed at the time the nonfunctioning system was taken over.
On January 16, 2008 the commission approved for proposal a set of rules (Rule Project 2007-048-291-PR) that contained amendments to implement HB 149. This rule proposal was published in the February 1, 2008, issue of the Texas Register (33 TexReg 871). During the comment period for the proposed rule, the commission received comments that caused it to reconsider the way it was implementing HB 149 and the commission withdrew the sections of the proposed rule related to HB 149 from that rulemaking.
The rule proposed in the Texas Register today is the commission's proposal for implementing HB 149.
SECTION BY SECTION DISCUSSION
Subchapter A: General Provisions
§291.3, Definitions of Terms
The commission proposes to add a definition for "nonfunctioning system" in §291.3(28). The commission proposes the following definition: A retail public utility under the supervision of a receiver, temporary manager, or that has been referred for the appointment of a temporary manager or receiver, pursuant to §291.142 of this title (relating to Operation of Utility That Discontinues Operation or Is Referred for Appointment of a Receiver) and §291.143 of this title (relating to Operation of a Utility by a Temporary Manager). The definition increases the number of systems that qualify as nonfunctioning. By being classified as a nonfunctioning system, a system can qualify to have a temporary manager or receiver appointed. The individual appointed will have the necessary expertise to help the nonfunctioning system move toward compliance. The commission proposes this change to provide guidance in implementing TWC, §13.046, as added by HB 149, 80th Legislative Session, 2007. The subsequent definitions were relettered to accommodate this proposed new definition.
Subchapter J: Enforcement, Supervision, and Receivership
§291.144, Fines and Penalties
The commission proposes to amend §291.144 to add §291.144(b) which would mandate that the commission not impose a penalty on the retail public utility taking over the nonfunctioning system for a period to be determined in cooperation with the retail public utility, which includes municipalities, districts, river authorities, and other local governments to ensure that the commission did not impose a penalty on an entity taking over a nonfunctioning utility. The commission proposes this change to implement TWC, §13.046, as added by HB 149, 80th Legislative Session, 2007. With the addition of proposed subsection (b), the current implied subsection (a) became subsection (a). The commission also proposes to delete the catchline in the existing implied subsection (a). The commission also proposes to correctly reference "Water Code" as "Texas Water Code."
§291.147, Temporary Rates for Services Provided for a Nonfunctioning System
The commission proposes new §291.147 which would establish a procedure for a retail public utility that acquires a nonfunctioning system to charge a temporary rate to recover the reasonable costs incurred for interconnection or other costs incurred in making services available and any other reasonable costs incurred to bring the nonfunctioning system into compliance. The commission proposes this new section to implement TWC, §13.046, as added by HB 149, 80th Legislative Session, 2007.
FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT
Nina Chamness, Analyst, Strategic Planning and Assessment, has determined that, for the first five-year period the proposed rules are in effect, no significant fiscal implications are anticipated for the agency or other units of state or local governments as a result of administration or enforcement of the proposed rules. The proposed rules are expected to provide incentives for retail public utility providers to take over nonfunctioning retail public utility providers to ensure the continued provision of public utility services.
The proposed rules amend Chapter 291 to provide a streamlined process allowing a retail public utility taking over a nonfunctioning retail water or sewer utility to apply for a ruling by the agency on the reasonableness of newly implemented rates to recover service costs. The agency would be required to consult with the utility to establish a reasonable timeframe to bring the water or wastewater system into compliance with agency rules. The proposed rules would also prohibit the agency from imposing penalties during this period for violations existing at the time the nonfunctioning system was taken over by the functioning retail public utility. Since the proposed rules would allow a local government to recoup reasonable costs and avoid the payment of penalties for certain violations, positive fiscal implications are expected for local governments providing retail water and sewer services to an area previously serviced by a nonfunctioning water or sewer utility.
There are approximately 1,375 retail water systems and 589 retail sewer systems owned by local governments. It is not known how many local governments might choose to take over a nonfunctioning retail water or sewer utility, but staff expects at least one municipality will take over a nonfunctioning system in the near future.
PUBLIC BENEFITS AND COSTS
Nina Chamness also determined that for each year of the first five years the proposed rules are in effect, the public benefit anticipated from the changes seen in the proposed rules will be the provision of continuous water or sewer service for areas where the water or sewer system is nonfunctioning.
By providing a streamlined process to establish reasonable fees that allow a retail public utility to recoup costs it may incur to bring a nonfunctioning water or sewer system into compliance and by not imposing penalties while a system is brought into compliance, the proposed rules should encourage businesses or individuals that own retail public utilities to provide water and sewer service to areas where systems have ceased to function properly. The costs of bringing a nonfunctioning system into compliance are impacted by economies of scale. If the customer base is large, the cost increase for each customer is expected to be minimal. If the customer base is small, the cost increase to recoup interconnection and other costs would have a greater impact on customers. Any reasonable cost increase will avoid the inconvenience costs and public health costs that might occur with a nonfunctioning, non-compliant water or sewer system.
Currently, there are two large businesses that own retail public utilities in the state. It is not known how many retail public utilities owned by businesses or individuals will choose to take over nonfunctioning water or sewer systems and bring them into compliance. However, since they may apply to the agency to increase rates to a reasonable level to recoup costs of bringing nonfunctioning systems into compliance, businesses and individuals that own retail public utilities are not expected to experience any adverse fiscal implications as a result of the proposed rules.
SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT
No adverse fiscal implications are anticipated for small or micro-businesses as a result of the proposed rules. There are currently 143 investor owned retail sewer systems and 601 investor owned retail water systems in the state that are small or micro-businesses. Since the proposed rules will allow any small or micro-business to recoup reasonable costs of bringing a nonfunctioning water or sewer system they may take over into compliance, these providers are not expected to experience adverse fiscal implications due to implementation of the proposed rules.
SMALL BUSINESS REGULATORY FLEXIBILITY ANALYSIS
The commission has reviewed this proposed rulemaking and determined that a small business regulatory flexibility analysis is not required because the proposed rules do not adversely affect a small or micro-business in a material way for the first five years that the proposed rules are in effect.
LOCAL EMPLOYMENT IMPACT STATEMENT
The commission has 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 rule in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and determined that the rulemaking is not subject to §2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the Texas Administrative Procedure Act. 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 implement provisions enacted in HB 149 of the 80th Legislature. Generally, these rules are intended to impact only the economic regulation of water and sewer providers. More specifically, the provisions provide a streamlined process to allow the retail public utility that takes over a nonfunctioning retail water or sewer system to implement temporary rates and apply for a ruling on the reasonableness of the newly implemented rates and establishes a reasonable amount of time for the retail public utility to bring the water or wastewater system into compliance, and prohibits the commission from imposing a penalty during this period for any violation that existed at the time the nonfunctioning system was taken over. The proposed rules are not intended to have any impact on environmental regulations. Furthermore, this rulemaking does not qualify as a major environmental rule because it will not have an adverse economic effect. Based on the foregoing, the proposed rulemaking does not constitute a major environmental rule, and thus is not subject to the regulatory analysis provisions of Texas Government Code, §2001.0225. Furthermore, the rulemaking does not meet any of the four applicability requirements listed in Texas Government Code, §2001.0225(a).
This rulemaking does not meet the definition of a major environmental rule because it does not meet any of the four applicability requirements listed in Texas Government Code, §2001.0225(a). Texas Government Code, §2001.0225, only applies to a major environmental rule, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law. This rulemaking does not meet any of these four applicability requirements because the proposed rules: 1) are specifically required by state law, namely the TWC, and do not exceed a standard set by federal law; 2) do not exceed the express requirements of the TWC; 3) do not exceed a requirement of federal delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; and 4) the proposed rules will not be adopted solely under the general powers of the commission.
Based on the foregoing, the proposed rulemaking does not constitute a major environmental rule, and thus is not subject to the regulatory analysis provisions of Texas Government Code, §2001.0225.
The commission invites public comment regarding this draft regulatory impact analysis determination. 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 amendments to Chapter 291 and performed an analysis of whether these proposed rules constitute a taking under Texas Government Code, Chapter 2007. The intent of the proposed rules is to implement amendments enacted in HB 149, of the 80th Legislature.
The proposed rules would substantially advance the intent of the rulemaking by creating a streamlined process to allow the retail public utility that takes over a nonfunctioning water or sewer system to implement temporary rates and apply for a ruling on the reasonableness of the newly implemented rates and by establishing a reasonable amount of time for the retail public utility to bring the nonfunctioning system into compliance, during which the commission will not impose a penalty for any violation that existed at the time the nonfunctioning system was taken over.
Promulgation and enforcement of these proposed rules will constitute neither a statutory nor a constitutional taking of private real property. The proposed regulations do not adversely affect a landowner's rights in private real property, in whole or in part, temporarily or permanently, because this rulemaking does not burden nor restrict or limit the owner's right to property. More specifically, these rules implement retail water and sewer utility rate regulations, and other related regulations of retail water and sewer service providers, none of which imposes any burdens or restrictions on private real property. Therefore, the proposed rules do not constitute a taking under Texas Government Code, Chapter 2007.
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed the proposed rules and found that they are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2) or (4), nor will they affect any action/authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11(a)(6). Therefore, the proposed rules are not subject to the Texas Coastal Management Program.
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 September 18, 2008, at 2:00 p.m. in Building E, Room 201S, 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 prior to the hearing.
Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact Michael Parrish, Office of Legal Services at (512) 239-2548. Requests should be made as far in advance as possible.
SUBMITTAL OF COMMENTS
Written comments may be submitted to Michael Parrish, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at: http://www5.tceq.state.tx.us/rules/ecomments/ . File size restrictions may apply to comments being submitted via the eComments system. All comments should reference Rule Project Number 2008-014-291-PR. The comment period closes September 22, 2008. Copies of the proposed rulemaking can be obtained from the commission's Web site at http://www.tceq.state.tx.us/nav/rules/propose_adopt.html . For further information, please contact Tammy Benter, Utilities and Districts Section, Water Supply Division, at (512) 239-6136.
SUBCHAPTER A. GENERAL PROVISIONS
STATUTORY AUTHORITY
The amendment is proposed under TWC, §5.102, which provides the commission the general powers to carry out duties under TWC and §5.103, which provides the commission with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the TWC and other laws of this state. In addition, TWC, §13.041 states that the commission may regulate and supervise the business of every water and sewer utility within its jurisdiction and may do all things, whether specifically designated in TWC, Chapter 13 or implied in TWC, Chapter 13, necessary and convenient to the exercise of this power and jurisdiction. Further, TWC, §13.041 also states that the commission shall adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules governing practice and procedure before the commission. Finally, TWC, §13.046 requires the commission to adopt rules that allow a retail public utility that takes over the provision of services for a nonfunctioning retail water or sewer utility service provider to charge a reasonable rate for the services provided to the customers of the nonfunctioning system and TWC, §13.046 also requires the commission to provide a reasonable period for a retail public utility that takes over the provision of services for a nonfunctioning retail water or sewer utility system to bring the nonfunctioning system into compliance with the commission rules during which the commission shall not impose a penalty for any deficiency in the system that is present at the time the utility takes over the nonfunctioning system.
The proposed amendment implements TWC, §13.046.
§291.3.Definitions of Terms.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.
(1) - (27) (No change.)
(28) Nonfunctioning system--A retail public utility under the supervision of a receiver, temporary manager, or that has been referred for the appointment of a temporary manager or receiver, pursuant to §291.142 of this title (relating to Operation of Utility That Discontinues Operation or Is Referred for Appointment of a Receiver) and §291.143 of this title (relating to Operation of a Utility by a Temporary Manager).
(29) [(28)] Person--Any natural
person, partnership, cooperative corporation, association, or public
or private organization of any character other than an agency or municipality.
(30) [(29)] Physician--Any public
health official, including, but not limited to, medical doctors, doctors
of osteopathy, nurse practitioners, registered nurses, and any other
similar public health official.
(31) [(30)] Point of use or
point of ultimate use--The primary location where water is used or
sewage is generated; for example, a residence or commercial or industrial
facility.
(32) [(31)] Potable water--Water
that is used for or intended to be used for human consumption or household use.
(33) [(32)] Premises--A tract
of land or real estate including buildings and other appurtenances thereon.
(34) [(33)] Public utility--The
definition of public utility is that definition given to water and
sewer utility in this subchapter.
(35) [(34)] Purchased sewage
treatment--Sewage treatment purchased from a source outside the retail
public utility's system to meet system requirements.
(36) [(35)] Purchased water--Raw
or treated water purchased from a source outside the retail public
utility's system to meet system demand requirements.
(37) [(36)] Rate--Includes every
compensation, tariff, charge, fare, toll, rental, and classification
or any of them demanded, observed, charged, or collected, whether
directly or indirectly, by any retail public utility, or water or
sewer service supplier, for any service, product, or commodity described
in Texas Water Code, §13.002(23), and any rules, regulations,
practices, or contracts affecting any such compensation, tariff, charge,
fare, toll, rental, or classification.
(38) [(37)] Ratepayer--Each
person receiving a separate bill shall be considered as a ratepayer,
but no person shall be considered as being more than one ratepayer
notwithstanding the number of bills received. A complaint or a petition
for review of a rate change shall be considered properly signed if
signed by any person, or spouse of any such person, in whose name
utility service is carried.
(39) [(38)] Reconnect fee--A
fee charged for restoration of service where service has previously
been provided. It may be charged to restore service after disconnection
for reasons listed in §291.88 of this title (relating to Discontinuance
of Service) or to restore service after disconnection at the customer's
request.
(40) [(39)] Retail public utility--Any
person, corporation, public utility, water supply or sewer service
corporation, municipality, political subdivision or agency operating,
maintaining, or controlling in this state facilities for providing
potable water service or sewer service, or both, for compensation.
(41) [(40)] Retail water or
sewer utility service--Potable water service or sewer service, or
both, provided by a retail public utility to the ultimate consumer
for compensation.
(42) [(41)] Safe drinking water
revolving fund--The fund established by the Texas Water Development
Board to provide financial assistance in accordance with the federal
program established under the provisions of the Safe Drinking Water
Act and as defined in Texas Water Code, §15.602.
(43) [(42)] Service--Any act
performed, anything furnished or supplied, and any facilities or lines
committed or used by a retail public utility in the performance of
its duties under the Texas Water Code to its patrons, employees, other
retail public utilities, and the public, as well as the interchange
of facilities between two or more retail public utilities.
(44) [(43)] Service line or
pipe--A pipe connecting the utility service provider's main and the
water meter or for sewage, connecting the main and the point at which
the customer's service line is connected, generally at the customer's
property line.
(45) [(44)] Sewage--Ground garbage,
human and animal, and all other waterborne type waste normally disposed
of through the sanitary drainage system.
(46) [(45)] Standby fee--A charge
imposed on unimproved property for the availability of water or sewer
service when service is not being provided.
(47) [(46)] Tap fee--A tap fee
is the charge to new customers for initiation of service where no
service previously existed. A tap fee for water service may include
the cost of physically tapping the water main and installing meters,
meter boxes, fittings, and other materials and labor. A tap fee for
sewer service may include the cost of physically tapping the main
and installing the utility's service line to the customer's property
line, fittings, and other material and labor. Water or sewer taps
may include setting up the new customer's account, and allowances
for equipment and tools used. Extraordinary expenses such as road
bores and street crossings and grinder pumps may be added if noted
on the utility's approved tariff. Other charges, such as extension
fees, buy-in fees, impact fees, or contributions in aid of construction
(CIAC) are not to be included in a tap fee.
(48) [(47)] Tariff--The schedule
of a retail public utility containing all rates, tolls, and charges
stated separately by type or kind of service and the customer class,
and the rules and regulations of the retail public utility stated
separately by type or kind of service and the customer class.
(49) [(48)] Temporary water
rate provision--A provision in a utility's tariff that allows a utility
to adjust its rates in response to mandatory water use reduction.
(50) [(49)] Test year--The most
recent 12-month period for which representative operating data for
a retail public utility are available. A utility rate filing must
be based on a test year that ended less than 12 months before the
date on which the utility made the rate filing.
(51) [(50)] Utility--The definition
of utility is that definition given to water and sewer utility in
this subchapter.
(52) [(51)] Water and sewer
utility--Any person, corporation, cooperative corporation, affected
county, or any combination of those persons or entities, other than
a municipal corporation, water supply or sewer service corporation,
or a political subdivision of the state, except an affected county,
or their lessees, trustees, and receivers, owning or operating for
compensation in this state equipment or facilities for the production,
transmission, storage, distribution, sale, or provision of potable
water to the public or for the resale of potable water to the public
for any use or for the collection, transportation, treatment, or disposal
of sewage or other operation of a sewage disposal service for the
public, other than equipment or facilities owned and operated for
either purpose by a municipality or other political subdivision of
this state or a water supply or sewer service corporation, but does
not include any person or corporation not otherwise a public utility
that furnishes the services or commodity only to itself or its employees
or tenants as an incident of that employee service or tenancy when
that service or commodity is not resold to or used by others.
(53) [(52)] Water use restrictions--Restrictions
implemented to reduce the amount of water that may be consumed by
customers of the system due to emergency conditions or drought.
(54) [(53)] Water supply or
sewer service corporation--Any nonprofit corporation organized and
operating under Texas Water Code, Chapter 67, that provides potable
water or sewer service for compensation and that has adopted and is
operating in accordance with by-laws or articles of incorporation
which ensure that it is member-owned and member-controlled. The term
does not include a corporation that provides retail water or sewer
service to a person who is not a member, except that the corporation
may provide retail water or sewer service to a person who is not a
member if the person only builds on or develops property to sell to
another and the service is provided on an interim basis before the
property is sold. For purposes of this chapter, to qualify as member-owned,
member-controlled a water supply or sewer service corporation must
also meet the following conditions.
(A) All members of the corporation meet the definition of "member" under this section, and all members are eligible to vote in those matters specified in the articles and bylaws of the corporation. Payment of a membership fee in addition to other conditions of service may be required provided that all members have paid or are required to pay the membership fee effective at the time service is requested.
(B) Each member is entitled to only one vote regardless of the number of memberships owned by that member.
(C) A majority of the directors and officers of the corporation must be members of the corporation.
(D) The corporation's by-laws include language indicating that the factors specified in subparagraphs (A) - (C) of this paragraph are in effect.
(55) [(54)] Wholesale water
or sewer service--Potable water or sewer service, or both, provided
to a person, political subdivision, or municipality who is not the
ultimate consumer of the service.
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 August 8, 2008.
TRD-200804155
Robert Martinez
Director, Environmental Law Division
Texas Commission on Environmental Quality
Earliest possible date of adoption: September 21, 2008
For further information, please call: (512) 239-2548
STATUTORY AUTHORITY
The amendment and new section are proposed under TWC, §5.102, which provides the commission the general powers to carry out duties under TWC and §5.103, which provides the commission with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the TWC and other laws of this state. In addition, TWC, §13.041 states that the commission may regulate and supervise the business of every water and sewer utility within its jurisdiction and may do all things, whether specifically designated in TWC, Chapter 13 or implied in TWC, Chapter 13, necessary and convenient to the exercise of this power and jurisdiction. Further, TWC, §13.041 also states that the commission shall adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules governing practice and procedure before the commission. Finally, TWC, §13.046 requires the commission to adopt rules that allow a retail public utility that takes over the provision of services for a nonfunctioning retail water or sewer utility service provider to charge a reasonable rate for the services provided to the customers of the nonfunctioning system and TWC, §13.046 also requires the commission to provide a reasonable period for a retail public utility that takes over the provision of services for a nonfunctioning retail water or sewer utility system to bring the nonfunctioning system into compliance with the commission rules during which the commission shall not impose a penalty for any deficiency in the system that is present at the time the utility takes over the nonfunctioning system.
The proposed amendment and new section implement TWC, §13.046.
§291.144.Fines and Penalties.
(a) [Disposition.] Fines and
penalties collected under Texas Water Code, Chapter 13,
from a retail public utility that is not a public utility in other
than criminal proceedings shall be paid to the commission and deposited
in the general revenue fund.
(b) The commission shall provide a reasonable period for a retail public utility that takes over a nonfunctioning system to bring the nonfunctioning system into compliance with commission rules, during which the commission may not impose a penalty for any deficiency in the system that is present at the time the utility takes over the nonfunctioning system. The commission must consult with the utility before determining the period and may grant an extension of the period for good cause.
§291.147.Temporary Rates for Services Provided for a Nonfunctioning System.
(a) Notwithstanding other provisions of this chapter, upon sending written notice to the executive director, a retail public utility that takes over the provision of services for a nonfunctioning retail public water or sewer utility service provider may immediately begin charging the customers of the nonfunctioning system a temporary rate to recover the reasonable costs incurred for interconnection or other costs incurred in making services available and any other reasonable costs incurred to bring the nonfunctioning system into compliance with commission rules.
(b) The retail public utility must provide notice of the temporary rate to the customers of the nonfunctioning system no later than the first bill which includes the temporary rates.
(c) Within 90 days of receiving notice of the temporary rate increase, the executive director will issue an order regarding the reasonableness of the temporary rates. In making the determination, the executive director will consider information submitted by the retail public utility taking over the provision of service, the customers of the nonfunctioning system, or any other affected person.
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 August 8, 2008.
TRD-200804156
Robert Martinez
Director, Environmental Law Division
Texas Commission on Environmental Quality
Earliest possible date of adoption: September 21, 2008
For further information, please call: (512) 239-2548