HBA-EDN H.B. 3545 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3545 By: Chisum Environmental Regulation 3/26/2001 Introduced BACKGROUND AND PURPOSE The federal Clean Air Act, which was first implemented in September 1971, requires that any source of air emissions must obtain a permit to operate. Any facility which was in operation before 1971 is considered grandfathered from the requirement to obtain a permit before beginning construction. Facilities with no preconstruction permit are classified as grandfathered, but these facilities do not necessarily remain uncontrolled. Under current law, there is a voluntary emissions reduction program in effect which has a deadline of September 1, 2001. Merely extending this voluntary program beyond the deadline may discourage participation in the current program until the new deadline. Bringing the grandfathered status of facilities to an abrupt end may also have this effect. House Bill 3545 phases out the grandfathered status of facilities. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Natural Resource Conservation Commission in SECTION 2 (Secs. 382.05183, 382.05184, 382.05185, and 382.05186) of this bill. ANALYSIS House Bill 3545 amends the Health and Safety Code to authorize the Texas Natural Resource Conservation Commission (TNRCC) to issue a permit for a facility that was in existence on or before August 30, 1971 (grandfathered facility), a facility located at a small business stationary source (small business facility), an electric generating facility, or a pipeline facility (Sec. 382.051). The bill prohibits any grandfathered facility that does not have an application pending for a permit or other authorization under the Texas Clean Air Act, other than a federal operating permit, and that has not submitted a notice of shutdown from emitting air contaminants on or after dates set forth in the bill according to the designation of the area in which the facility is located. The bill sets forth provisions regarding a notice of shutdown (Secs. 382.05181 and 382.05182). The bill authorizes an owner or operator of a grandfathered facility or a small business facility to apply for a permit to operate and requires the Texas Natural Resource Conservation Commission (TNRCC) to grant a permit if the application demonstrates compliance with certain criteria relating to modifications to the facility. TNRCC is prohibited from granting the permit if it finds that the emissions from the facility will contravene the intent of these provisions. The bill provides that a person planning the modification of a facility previously permitted must comply with provisions regarding preconstruction permits before modifying. The bill provides that a permit application is subject to notice and hearing requirements. TNRCC is authorized to adopt rules as necessary to implement and administer these provisions (Secs. 382.05183-382.05184). The bill provides that an electric generating facility is considered permitted with respect to all air contaminants if the facility is a natural gas-fired electric generating facility that has applied for or obtained a permit for the emission reduction of "grandfathered facilities" or an electric generating facility of 25 megawatts or less. The bill provides that a grandfathered electric generating facility not described above shall be considered permitted with respect to nitrogen oxides, sulfur dioxide, and opacity if the facility has applied for or obtained a permit regarding the emission reductions of "grandfathered facilities." TNRCC is required to adopt rules regarding acceptable fuel oil grades and is authorized to adopt rules to implement these provisions (Sec. 382.05185). The bill requires TNRCC, by rule, to establish procedures for applications and registrations for existing natural gas processing, treating, or compression facilities connected to or part of a natural gas gathering or transmission pipeline and authorizes TNRCC, by rule, to designate counties or regions of the state where greater reductions of emissions will be required than in other areas. The bill sets forth provisions regarding the permitting of pipeline facilities and authorizes TNRCC to adopt rules to implement these provisions (Sec. 382.05186). The bill provides that operating permit fees do not apply to a grandfathered non-natural gas fired electric generating facility with a permit or a permit application pending. The bill requires TNRCC, if no permit is pending for the facility, to double the amount of the operating fee imposed for all emissions of 4,000 tons or less each fiscal year and treble the amount of the fee imposed for all emissions in excess of 4,000 tons each fiscal year (Sec. 382.0621). EFFECTIVE DATE September 1, 2001.