This Legislative EIS is a collaborative effort of the Lone Star Chapter staff: Tracy Arambula, Environmental Justice Director; Ken Kramer, Chapter Director; Fred Richardson, Communications Director; Erin Rogers, Grassroots Outreach Coordinator; Brian Sybert, Natural Resources Director; Aileen Truax, Development Director; and Jennifer Walker, Administrative Assistant. Fred Richardson compiled and edited the report.

The Sierra Club appreciates the use of many source documents compiled by a number of legislative staff, representatives of other environmental and public interest groups, and state agency staff that served as background for the reviews of legislation provided in this publication.

The Lone Star Chapter is grateful for the work of the organizations supporting the Alliance for a Clean Texas (ACT). The cooperative efforts of the Chapter and 20 other statewide organizations and over 100 regional and community-based organizations were critical to progress made on environmental issues during the 77^th Texas Legislature.

Aileen Truax, Lone Star Chapter Development Director, was instrumental in setting up the Legislative EIS receptions in several cities in Texas for the unveiling of this report.

The Lone Star Chapter of the Sierra Club wishes to express its appreciation to a number of Sierra Club volunteers and supporters for their assistance in the arrangements for the Legislative EIS events, especially Rita Beving, Margie & John Haley, Terry Sullivan, and Wendel Withrow in Dallas; Hector Gonzalez, Mary & Ben Bradshaw, Bill & Beth Lewis in San Antonio; and Frank Blake, Page Williams, Marsha Scott, and the Citizens Environmental Coalition in Houston.

TABLE OF CONTENTS

Introduction

This report, Actions and Decisions: 77^th Texas Legislature – An Environmental Impact Statement, produced by the Lone Star Chapter of the Sierra Club, represents the third such review of environmental and related legislation enacted or considered by the Texas Legislature during one of its regular biennial sessions. The initial "Legislative EIS" was prepared in 1997 to report on the work of the 75^th Texas Legislature, and the second EIS followed in 1999. The publication of these legislative reviews is a reflection of the high priority that the Lone Star Chapter of the Sierra Club places on monitoring and working to influence the actions of the State Legislature that affect the environment of Texas and the health of its people.

There were at least five factors that led to this legislative session being a positive one for environmental issues:

The environmental successes of this session were also due to the tremendous work done by state legislators too numerous to name here individually. Some of these individuals are noted in the reviews of various bills that follow. The support of others is demonstrated through their voting records on environmental issues, and those voting records are presented in this document. There is much more work to be done to protect the environment and the public health of Texans, but definite progress toward that end was made during the 77^th regular session.

This document describes legislation enacted by the Texas Legislature during the spring of 2001 that may effect the environment and natural resources of Texas as well as public health. An examination of some of the bills that did not pass the Legislature during the 2001 regular session is included as well. The bills included in that section are ones that might have affected the environment and public health either negatively or positively and that were judged to be important because of their topics or the likelihood that similar bills might be introduced in subsequent legislative sessions. This report does not present an all-inclusive list of the literally hundreds of bills that were tracked by the Lone Star Chapter of the Sierra Club, but it does describe some of the most interesting and significant bills.

Special attention has been given to five issues that reflected the priorities of the Lone Star Chapter and ACT during the 77^th session. These include reform of the TNRCC, closure of the grandfather loophole for dirty old polluters, radioactive waste management, sweeping water legislation known as SB 2, and parks and wildlife management. Each topic is discussed in a separate section of the report. Many other miscellaneous bills on issues ranging from fisheries management to fuel cell development are briefly summarized in four general sections organized according to final disposition of the bill and our judgement as to what the impact on the environment and public health will be or might have been.

The Legislative EIS includes an index to the subject matter of all bills reviewed. The index begins on p. 61. More information about the legislation discussed in this report as well as other legislation enacted by the 77^th Texas Legislature may be accessed from the Texas Legislature’s web site at www.capitol.state.tx.us.

An important feature of the Legislative EIS is the section on record votes. Separate voting records are presented for House and Senate members and were compiled from House and Senate journals as well as the Texas Legislative Service (TELICON) database. These voting records provide important information about how individual members voted on key environmental measures. They are helpful in holding legislators accountable for their actions.

Voting records, however, are not the only measure of a legislator’s actions on the environment or any other issue. Much of the action of the Legislature takes places away from the floor of the House or Senate (for example, the critical action on a bill may take place in the committee of jurisdiction or in the House Calendars Committee, which determines whether a bill is scheduled for House floor debate). Sometimes a legislator will give critical help behind the scenes to certain pieces of legislation but may not wish to be publicly known for providing that assistance.

Another problematic aspect of voting records is that many legislators wish to avoid record votes because they fear their votes will be used (and possibly misused) against them in a political campaign. Therefore, in some sessions there are relatively few record votes available for an evaluation of a legislator’s actions. That was the case again in the Texas House this session, where only a few record votes were deemed appropriate to use in this analysis. A voting record based on such a small number of votes is likely to give an incomplete view of how legislators act on the environment and related matters.

When used accurately and with regard for a legislator’s broader record and actions, voting records can be a useful tool for evaluating legislators and holding them accountable for their actions. But readers must remember that this is an imperfect tool, and should be used in conjunction with other forms of analysis in order to get a complete evaluation of a particular legislator.

The Lone Star Chapter of the Sierra Club hopes that this Legislative EIS will give Texans and others a good sense of how the environment and public health fared in the 77^th session. At the same time, however, what the Legislature enacts as law is only part of the process. Now comes the implementation by state agencies of these new laws and requirements. Sometimes the intention of the Legislature is not accurately or completely reflected in the administration of new laws. The true impact of the legislation enacted this session will be dependent upon numerous actions of state agencies over the coming months and years. As was the case during the legislative session itself, the Lone Star Chapter will be involved in monitoring the work of state agencies to help determine whether the laws passed in 2001 are implemented as intended, and yield the benefits promised to the people of Texas and the natural resources that sustain them.

Senate Bill 2 – Omnibus Water Legislation

The major legislative action on water issues this session centered on Senate Bill 2, sponsored by Sen. Buster Brown (R-Lake Jackson) and Rep. Ron Lewis (D-Mauriceville). This measure was characterized as building upon the regional water planning process initiated by legislation enacted as Senate Bill 1 in 1997 at the urging of then-Lt. Governor Bob Bullock. In some respects that was accurate, but the legislation also reflected a continuation of disputes that arose in the 1999 session about the establishment of single-county groundwater districts and a growing interest in the issue of transporting groundwater outside district boundaries to provide water for thirsty cities. Moreover, as initially filed, the bill sought to eliminate what Sen. Brown and others perceive as an impediment to interbasin transfer of surface water: the so-called "junior water rights" provision of the state water code that applies to such transfers.

SB 2 went through such a laborious and tortuous path in the Legislature and was revamped at so many points in the process that the only rationale way to report on the bill is to summarize the outcomes on some of the major issues that were included in the legislation at one point or another in the process. The overall judgment of the environmental community regarding SB 2 is that it has some positive provisions and avoids making any irrevocable decisions about funding of water infrastructure projects that could pose threats to the environment.

For example, on the positive side, the legislation strengthens the authority of groundwater districts (which are designated as the state’s preferred method of managing groundwater) and takes other affirmative steps toward addressing groundwater issues. SB 2 made some improvements in the regional water planning process, although it failed to address some important issues about the process that were raised by the environmental community and others. The legislation sets up an interim study that holds the promise of evaluating a wide range of water resource issues, including environmental concerns.

On the other hand, SB 2 establishes some new entities in state water resources policy that could prove to be problematic in the future: a Texas Water Advisory Council, a water infrastructure fund (but with no dedicated source of revenue at this time), and a rural water assistance fund (again with no source of revenue). Moreover, Sen. Brown, is on record as favoring a water system for the state that transports vast quantities of surface and groundwater by pipelines crossing the state, and the interim study will look at the issue of water "conveyance" and make recommendations to the next Legislature.

Following is a more specific account of some of the key issues swirling around SB 2:

Gone from the bill when it passed the Senate was a controversial provision in the filed version of SB 2 that would have repealed the "junior water rights" principle that applies to interbasin transfers of water. In 1997 the Texas House had forced the Senate to accept a provision in SB1 that established that any water right acquired for the purpose of transferring water out of one river basin to another would be junior to that of any other water right in the basin of origin. In other words, a junior water right would be honored only after all water rights designated for usage in the basin of origin had been satisfied in times of shortage.

The impact of that provision was characterized as dampening interest in interbasin transfers. The reasoning was that anyone acquiring a water right for an inter-basin transfer would not be very enthusiastic about having a right that would be subject to being curtailed first in times of drought before everyone else’s more senior water right.

Whether or not that assumption was correct, many have viewed the junior water rights provision as an impediment to interbasin transfers, and thus a safeguard for people in river basins who do not wish to cede their water to another basin. Among the most vocal supporters of the junior water rights provision are community and local government leaders in the Southeast Texas area (Beaumont-Port Arthur and its environs) and Sen. David Bernsen (D-Beaumont). Largely as a result of determined opposition from those quarters and from certain House leaders, Sen. Brown tactfully (and tactically) dropped the junior water rights repeal from SB 2 before the bill was reported out of committee. The issue was never raised again during the 77^th session.

Also gone from SB 2 by the time it passed the Senate were virtually all of the new revenue sources for financing water projects that had been in the original version of the bill. These revenue sources included a sales tax on water sales and a dollar per person tax to be collected by counties. These revenue mechanisms fell victim to opposition from various sources.

The only revenue-raising provision in the bill as passed by the Senate was a surcharge on the sale of bottled water, and no one has yet been able to calculate how much money that would generate. The House dropped the bottled water surcharge, and the conference committee on SB 2 did not reinstate it.

SB 2 does set up mechanisms, however, for receiving revenue for water projects if funding sources are later established or if appropriations are made for these purposes. The first financing mechanism is the Water Infrastructure Fund. The second is the Rural Water Assistance Fund. A separate legislative enactment, a proposed constitutional amendment enacted as HJR 81, would provide an initial $50 million out of a $2 billion dollar bond authorization increase for the Texas Water Development Board if the measure is approved by the voters in the fall of 2001.

Members of the environmental community believe that there is no demonstrated need for the Water Infrastructure Fund since there is already a series of funding programs for water projects through the Texas Water Development Board. A program tailored to meet specific rural water needs may be more justified, but no specific revenue source has been identified for that fund.

Clearly, however, the Legislature did not commit the billions of dollars that have been estimated by the SB 1 regional planning groups as needed to fund water projects to meet projected water needs by the year 2050. The Sierra Club and others disagree that the water needs will be as great as projected and thus disagree with the need for billions of dollars in new water funding. The regional plans call for a number of major new dams and pipelines to meet projected water demands, with a shocking price tag of almost $17 billion. Unfortunately, few of the regional plans did any extensive economic analysis of proposed projects to determine which, if any, make sense from a cost-benefit standpoint.

Consider for example that the Dallas region projects that it will "need" $6 billion of that $17 billion for new water projects. Yet the major water user in the region, Dallas, predicts a per capita water use figure over the next 30 years that is higher than that for any other major Texas city. Dallas projects a per capita water use of 264 gallons per day by 2030, almost twice the per capita use expected for San Antonio. It is the only major Texas city to predict an increase in per capita water use. If the per capita water use in Dallas was lowered to a more reasonable amount, a major dam proposed to provide water for the region could be eliminated.

This example raises serious questions about the claim that major new state funding for water projects is needed. It would have been premature for SB 2 to establish new sources of funding for dams and pipelines, especially with the large cost to ratepayers. Consumers deserve a more thorough review of the need for these projects, and state planners should prioritize projects before any financial commitment is made to build them. Indeed one of the positive outcomes of SB 2 is that regional planning groups will now be required to report to the Water Development Board on how they envision their proposed water projects would be funded. That should prompt closer scrutiny of the financial viability of these projects.

SB 2 creates a new Texas Water Advisory Council composed of 13 members, including the chairs and board members from several state agencies, two statewide elected officials, three Texas House members, two Texas Senators, and three members of the general public appointed by the governor (one representing groundwater management, one representing surface water management, and one representing the environmental community). The stated purpose of the Council is to "heighten the level of dialogue on significant water policy issues and, in an advisory role only, strive to provide focus and guidance on state water policy initiatives…."

In the original version of the bill the Council was known as the Policy Council rather than the Advisory Council, and there was much heartburn on the part of many water interests about what this new body might do. There was concern among some groups that eventually the Council would become a new layer of water bureaucracy in the state that, depending upon your point of view, was either going to promote a frenzy of dam and pipeline building or bring new water projects to a screeching halt. Concerns were raised that although greater coordination of state water policy activities and a heightened dialogue on state water issues may be advisable, the creation of a new state council is not necessary to achieve those goals. Lingering concerns of that nature resulted in an eventual compromise between the House and the Senate that "sunsets" the Council within four years unless the Legislature passes new legislation to continue this body.

SB 2 requires the new Council to review river authorities and other water districts similar to river authorities based on certain administrative policies and performance standards – the review would be done on a five-year cycle, and each authority or district would be required to prepare a "self-assessment" for the Council as part of the review process.

As enacted, SB 2 includes an extensive set of provisions regarding groundwater management. It ratifies the groundwater districts that were set up on a temporary basis by legislation enacted in 1999 and makes those districts permanent bodies, subject to confirmation by the voters within the district boundaries.

Most of the provisions are favorable to groundwater districts, which are reaffirmed as the preferred means of managing groundwater in Texas. The authority of districts to regulate wells is clarified to address recent state court decisions that had questioned whether districts had the power to modify the "rule of capture" through well regulation. SB 2 strengthens the enforcement powers of districts, allows them to regulate additional types of wells, and allows the districts to purchase groundwater rights for conservation purposes if the rights are permanently held in trust not to be produced.

SB 2, however, does establish a prohibition against a groundwater district rejecting a proposed permit for groundwater withdrawal if that rejection is based on the fact that the permit would result in the transfer ("export") of groundwater out of the district. What the districts get in return, among other things, is the ability to levy an export fee on water to be transferred out of the district.

An interesting side note on the export fee provision is that the version of the bill that passed the Senate included a "technical" amendment that would have been a boon to oilman, corporate raider and now water rancher T. Boone Pickens. The amendment exempted proposed transfers of groundwater from one district to another from all export fees if the export application was filed prior to April 2001. Pickens, who plans to pump water from a Panhandle aquifer and send it to Texas cities to the south, was one of just two parties in the state to have a groundwater export application on file when the Senate passed SB 2. The exemption was added by the sponsor on the Senate floor as part of a set of "technical" amendments. That exemption was removed in the House, however, and was not restored by the conference committee on SB 2.

In addition, the final version of the bill that was signed by the governor contains the following provisions on groundwater:

Ensuring adequate flows in our rivers and streams is critical—without it we lose birds and wildlife, along with favorite summertime activities like canoeing, swimming, and fishing. Moreover, the ability of a stream to cleanse itself of pollution depends greatly on the amount of water flow. In our coastal regions, freshwater flows into bays and estuaries is critical for sustaining aquatic life in the Gulf of Mexico, as well as the tourism and recreational and commercial fishing that depend upon a healthy ecosystem. This realization has not occurred yet for most Texas legislators, and thus SB 2 missed a good opportunity to enhance protection of instream flows.

As it passed the Senate, SB 2 did include provisions to enhance protection of in-stream uses. The Senate version of the bill:

Unfortunately, despite support for instream use protections by House Natural Resources Committee Chair David Counts (D-Knox City), the House removed all of those provisions from the bill except for the one dealing with studies, and that was modified somewhat. None of the other provisions were included in the conference committee report on the bill, which was the final version of SB 2. The House is on record, however, as saying that the instream use issue needs to be addressed as part of the interim study set up by SB 2.

The first round of regional planning under SB 1 was a good starting point for an extensive evaluation of water supply needs and a consideration of ways of meeting those needs. The process needs to be more comprehensive, however, in addressing water resource issues. As enacted, SB 2 requires that:

Unfortunately, SB 2 does not include language to clarify that regional planning groups must recommend strategies for meeting environmental water needs, as well as assess the expected environmental impacts of proposed water management strategies. Nor does the bill require a cost-benefit analysis of proposed water projects.

SB 2 establishes a Joint Committee on Water Resources, a legislative interim study composed of three House members and three Senate members. The committee is required to conduct an interim study and make recommendations on the following topics:

The committee is required to receive information about encouraging the effective development of water marketing and water movement, prioritizing the use of state funds for financing water development, and identifying reasonable mechanisms, including measures for encouraging donation of water rights, for protecting instream uses. The committee is supposed to complete and submit a report to the Legislature by November 1, 2002.

There are many other provisions of SB 2 dealing with specific topics that were included at various points in the legislative process – provisions too numerous to describe in this review of legislative action. The full text of SB 2 is available online from the Legislature’s web site.

In general terms, the environmental community said that in order to be effective, SB 2 had to protect current volumes of river and stream flows, enhance the water planning process, protect groundwater, and steer clear of funding new water project boondoggles. SB 2 failed to meet that first test, except through the establishment of study requirements for in-stream uses and the potential for addressing the issue as part of the interim study. On the other measures, the outcome was more positive. Ultimately, the implementation of SB 2 and the outcome of the interim study will determine whether our lawmakers choose a common sense approach to water resource management that protects the environment while meeting human needs, or whether they gamble on a statewide plumbing system that might end up filling the cup of water profiteers while emptying our rivers, streams, and aquifers. The jury is still out.

Texas Parks & Wildlife (TPW) Sunset Review & Appropriations

Texas Parks & Wildlife performs a wide array of diverse functions that directly affect the ecological health of Texas. Some of the agency's functions include land conservation, wildlife management, water resources management, management of commercial fisheries, and enforcement of conservation regulations.

SB 305, the TPW sunset bill, will reauthorize the agency for another twelve years. Authored by Sen. Chris Harris (R-Arlington) and Rep. Fred Bosse (D-Houston), a key provision is a requirement that TPW prepare a "Land and Water Resources Conservation" plan. The agency will inventory all land and water associated with historical, natural, recreational, and wildlife resources in the state that are owned by governmental and non-profit entities that provide public access. The inventory will then be used to develop a conservation plan that will guide future agency decisions on how to meet the state's growing conservation and recreation needs. While it is unfortunate that land holdings of the School Land Board, the General Land Office, and the Permanent University Fund will be exempted from analysis and inclusion in the plan, the implementation of this policy is a significant gain for the natural environment and recreation in Texas.

The Sunset Commission reviewed the issue of increased funding for conservation and recreation. The commission suggested that the Legislature should lift the $32 million dollar cap on the sporting goods sales tax, or alternatively, approve general obligation bonds for the acquisition and development of parks and conservation lands. Unfortunately, this bill does not address this recommendation. Funding for TPW was addressed by the House Appropriations and Senate Finance committees through the appropriations bill.

In addition, the bill states that when making appointments to the Parks & Wildlife Commission, the governor shall attempt to include persons with expertise in historic preservation, conservation and outdoor recreation. The bill also prohibits a person from being a commission member if that person or their spouse is licensed by a regulatory agency in the field of conservation, outdoor recreation, or commercial fishing.

SB 305 also changes the way in which the Parks & Wildlife Commission operates. Now the committees of the commission which have five commission members or more serving on the committee must provide an opportunity for public testimony in an open meeting before making a major decision. Before the passage of SB 305 the committees of the commission did not accept public testimony before making major decisions. Since the bulk of the agency’s major decisions are made in committee meetings, this practice greatly limited public involvement in the commission's decision-making.

SB 305 prohibits TPW from advertising tobacco products in department publications. In the past, tobacco advertisements have provided funding for department activities. The bill requires the commission to adopt policies that govern fund-raising activities of agency employees on behalf of TPW and also requires the state auditor to audit the fund-raising activities of the department.

SB 305 requires TPW to develop a business plan for statewide commercial projects. All statewide commercial ventures undertaken by TPW must be justified by the business plan. Under this section of the bill, the agency must adjust or terminate a statewide commercial project that fails to meet the financial objectives stated in the plan.

SB 305 allows TPW to select and cooperate with non-profit partners to further agency goals. The department must obtain the approval of the commission for all collaborations with non-profit partners.

SB 305 also requires TPW to coordinate with Texas Historical Commission on the preservation of historical sites.

The bill requires the department to conduct a comprehensive study of the shrimp fishery and shrimp industry. The study will be used to determine the ecological health of the fishery and the economic health of the industry. Future policies regulating the shrimp industry will be based on the results of this study.

The funding package for staffing and operational expenses is earmarked primarily for the World Birding Center, Franklin Mountains State Park and Wyler Aerial Tramway, Chinati Mountains State Natural Area, Devil's Sinkhole State Natural Area, Lake Casa Blanca International State Park, Fort Boggy State Park, Government Canyon State Natural Area and Lake Tawakoni State Park.

In addition to the $5 million state parks annual funding package the appropriations bill restores TPW's entrepreneurial spending authority. This provision of the bill authorizes TPW to spend funds that the agency generates from its own entrepreneurial activities.

The Legislative Budget Board estimates that TPW will generate $1.2 million from programs such as the bluebonnet and horned lizard conservation license plates. TPW is also expected to generate an estimated $9 million over the biennium in entrepreneurial revenue for wildlife and fisheries funding. This includes revenues generated by the $3 surcharge on saltwater sportfishing stamps dedicated for the buy-back of commercial fishing licenses.

SB 1 also requires TPW to begin recovering costs that result from administering and managing commercial fisheries. To recover these costs TPW will have to increase fees for commercial fishing licenses.

SB 1 also approves a 4 percent pay increase for all state employees and an escalated bonus pay scale to reduce staff turnover. Unfortunately the pay increase and escalated bonus pay scale will have to be paid for out of the agency's available revenue since no addition funds to cover these costs are appropriated in SB 1.

RADIOACTIVE WASTE MANAGEMENT

Radioactive waste remains deadly for hundreds of thousands of years. The debate about what to do with the waste in Texas has raged on for not quite as many years, but has driven citizen participation in the issue for at least 20 years. During that time, the Sierra Club and other citizen groups have again and again forced the nuclear industry and state officials away from cheap and easy solutions such as dumping the waste in underground trenches in the backyards of low income, Mexican American communities. The 77^th legislative session was filled with more drama and controversy, but in the end no radioactive waste legislation was passed and no nuclear waste disposal facility will be built in the next 2 years. Citizens walked away with another victory under their belts and momentum to build support for safer radioactive waste solutions during the interim.

The showdown over radioactive waste began before the session started, with dueling House and Senate interim studies and dueling waste disposal companies. The House Environmental Regulation Committee study proposed that the state own the license for waste disposal and that assured isolation (above ground management) become an option for dealing with waste that Texas could accept under its compact with Vermont and Maine. (The Texas Compact, ratified by Congress in 1998, provides that if Texas builds a radioactive waste disposal facility it will accept waste from Vermont and Maine.) On the other hand, the Senate Natural Resources Committee interim study proposed that a private company be allowed to obtain a radioactive waste management license and permitted to dispose of nuclear weapons waste from the U.S. Department of Energy (DOE). While compact waste from Texas, Maine, and Vermont is expected to be approximately 2.7 million cubic feet over the 35-year lifespan of the compact, estimates on the volume for DOE waste reach into the hundreds of millions of cubic feet over the next ten years.

Similarly, two radioactive waste disposal companies were vying for business in Texas. Envirocare, with land for a possible site in Ward County, was lobbying for a state-owned license and the use of assured isolation. Waste Control Specialists, with a radioactive waste processing facility already located in Andrews County, was lobbying for privatization and below-ground dumping. But just weeks before the legislative session began Envirocare agreed to abandon operations in Texas pursuant to a lawsuit settlement with Waste Control Specialists. Additional pressure was focused on Texas by a court order that DOE clean up 50 years of cold war radioactive mess at over 70 sites throughout the country, as well as the Bush administration’s newly announced energy policy, which calls for the creation of a new generation of nuclear power plants if a cheap disposal option for existing waste and dismantled plants is found.

Tension was high when the session began in January. The Lone Star Chapter and the West Texas-based Texas Radioactive Waste Defense Coalition agreed on nine principles for radioactive waste management which were turned into legislation and filed by Rep. Lon Burnam (see list of bills at the end of this section). The Sierra Club and others prepared to fight the mammoth lobby team of Waste Control Specialists (which had contributed over $600,000 to state officials since 1997), as well as Texas’ nuclear utility giants. Since Waste Control Specialists opened its Andrews County site in 1995 the company has lost $77 million. By passing a bill that would allow it to break into the DOE waste clean-up market, Waste Control hoped to turn its losses into billions in profit.

Senator Robert Duncan (R-Lubbock) introduced SB 1541 only hours before the filing deadline in March. The 100-page bill was kept a secret from all but a few key legislators and industry lobbyists until it was filed. The bill allowed private companies to be licensed to import and dispose of massive amounts of radioactive waste at up to three separate disposal facilities, while transferring ownership of and liability for the waste to the state taxpayers. Senator Duncan invited the Sierra Club, along with several industry groups, to testify at the first Senate Natural Resources Committee hearing on the bill. After many meetings with Senator Duncan, grassroots pressure, and media publicity, Senator Duncan re-wrote the bill and removed many of the worst provisions. The new version attempted to limit the amount of waste imported to Texas and bar the importation of DOE waste. The number of disposal facilities was reduced from three to one.

The next significant action on the bill came when, in the words of one lobbyist, Senator Teel Bivins (R-Amarillo) "hijacked" Duncan’s bill by getting enough votes in a Senate Natural Resources Committee meeting to add a 16-page amendment restoring many of the provisions Senator Duncan had deleted. With four members of the committee present, Senators Brown, Duncan, and Lucio voted for the amendment while Senator Duncan voted against it. The Bivins amendment called for the creation of two private dumps—one for compact waste and one for virtually unlimited amounts of DOE waste, including a new category called "mixed waste": radioactive waste mixed with hazardous chemicals. The amendment was tailor-made for (if not written by) Waste Control Specialists.

The Lone Star Chapter and other organizations and individuals from across the state worked hard to convince 10 Senators to block the bill when it came to the Senate floor. Because Senator Bivins and Waste Control Specialists had convinced more than a majority of the Senate to vote for the bill, the Sierra Club and others attempted to take advantage of Senate rules that require a two-thirds majority of the Senate to bring any bill to the floor. This rule creates a situation in which 10 Senators can block a bill.

All of those who endeavored to find 10 votes to block consideration were bitterly disappointed when the bill was set for debate on the May 2 Senate calendar and only nine senators voted to block the bill (Sierra Club Senate record vote #5, p. 59). Senator Eliot Shapleigh (D-El Paso) offered an amendment to strip the provisions added by Bivins in committee, with Senators Duncan and Truan joining him to object to Bivins’ amendment. Unfortunately, Senator Shapleigh’s attempt to exclude DOE waste failed in a 16 to 13 vote (Senate record vote #6, p. 59), and the bill passed the Senate 19 to 10 (Senate record vote #7, p. 59).

Editorial opposition to the bill poured forth after the Senate vote, with the Austin American Statesman, Waco Tribune-Herald, Dallas Morning News, Alpine Observer and the El Paso Times all strongly denouncing the bill. The Houston Chronicle ran a guest editorial against the bill by a Houston-area Sierra Club member.

On April 3, the House Environmental Regulation Committee held a hearing on all radioactive waste bills filed in the House. A list of those bills and how they fared can be found at the end of this section. Many citizens from West Texas and Austin testified that afternoon against HB 3240, the House companion to SB 1541, and in favor of a slate of bills proposed by the Texas Radioactive Waste Defense Coalition and carried by Rep. Lon Burnam.

The Environmental Regulation Committee did not vote on any bills that day. Instead, Chairman Warren Chisum (R-Pampa) waited until SB 1541 was approved by the Senate and sent to the House. He then re-wrote the bill, changing several small but significant provisions, including a requirement that a private company actually build a facility for Texas Compact waste. This was significant because Bivins’ amendment included no requirement that a licensed private operator that establishes a highly profitable disposal site for DOE waste also establish a site to handle much smaller and less profitable amounts of Compact waste. Advocates of the legislation habitually justified it as necessary to fulfill Texas’ "obligations" under the Compact. (It should be noted that the Compact does not obligate Texas to build a radioactive waste disposal site).

On May 15^th the Environmental Regulation Committee met to vote on SB 1541. Despite

considerable grassroots pressure on committee members to strip the Bivins amendment from the bill, it was approved with the DOE waste provision intact.

SB 1541 was sent to the House Calendars Committee on May 19, only one day before the last House Calendar could be set according to House rules. The Lone Star Chapter, Public Citizen, League of Conservation Voters and numerous citizens from across the state worked to generate calls, letters and visits to Calendars Committee members. On Sunday, May 20^th at 7:00 PM—only 5 hours before the deadline to set the very last House Calendar—the Committee voted 5 to 3 against placing the bill on the calendar, thereby killing the bill. Rep. Debra Danburg (D-Houston) led the charge against the bill, with Representatives Harold Dutton (D-Houston), Brian McCall (R-Plano), Jim Solis (D-Harlingen), and Senfronia Thompson (D-Houston) also voting against it. Representatives Kim Brimer (R-Fort Worth), Gary Walker (R-Plains) and Chairman Barry Telford (D-De Kalb) voted to set the bill on the House calendar.

One last-ditch attempt was made to pass the bill by attaching a crucial element of SB 1541 to another bill as an amendment on the House floor. At 11:30pm on May 22, half an hour before the deadline for passing all bills, Rep. Ron Wilson (D-Houston) offered an amendment to a minor bill relating to the definition of hazardous waste. Wilson’s amendment to privatize radioactive waste disposal would have opened the floodgates to federal weapons waste. The amendment was withdrawn after Rep. Burnam raised a point of order against it, but it was quickly re-written and offered again. This time, several Representatives gathered at the microphone to "chub" (the House version of a filibuster) the bill until the midnight deadline, preventing passage of any legislation to privatize radioactive waste disposal.

Other Legislation Related to Radioactive Material

This bill, as originally filed, would have weakened the financial assurance requirements for uranium mining companies. At least 2 uranium mining companies in Texas have recently threatened bankruptcy in order to raid their clean-up trust funds to pay executive salaries and the opening of new mines. Sierra Club and others alerted Rep. Chisum of the need for greater, not lesser, financial scrutiny of the uranium mining companies. Rep. Chisum agreed, and re-wrote the bill. The new version of the bill deals mainly with fees and penalties for those who are licensed to use radioactive materials, and with the inspection of mammography machines.

Passed out of House and Senate committees but never taken up by the full Senate, this bill would have deleted a cartographic "box" around Sierra Blanca in Hudspeth County, Texas that exists in current law. The law currently stipulates that a radioactive waste disposal facility run by the state must be located within this box.

Attempted to close a gaping loophole in the Texas-Maine-Vermont radioactive waste compact that allows governor-appointed compact commissioners to vote to import unlimited amounts of nuclear power plant waste from other states to be dumped at a Texas disposal facility. This bill required the compact commissioners to take an oath to vote against accepting waste from any state besides Maine or Vermont.

Would have created a Texas Low-Level Radioactive Waste Management Authority to hold the license for long-term radioactive waste management. The authority could then contract with one or more private companies to operate one or more disposal facilities.

Would have required the host county of a radioactive waste disposal facility and all adjacent counties to hold a voter referendum on the siting of the facility. A waste disposal facility could be licensed only after an affirmative vote.

A 50-page bill that defined assured isolation, required the state to hold the license for radioactive waste disposal of assured isolation, removed the box around Hudspeth County, prohibited waste disposal within 100 km of the border, attempted to close the compact loophole, mandated that the disposal or assured isolation facility be built in West Texas, among other things.

The House companion to SB 1541.

Indoor Air Quality & Asbestos Regulation

Thanks to the efforts of small group of dedicated lawmakers, significant progress was made on indoor air quality and asbestos regulation during the 77^th session. Representatives Charlie Geren and Garnet Coleman authored bills that will make Texas the national leader in state-level regulation of building materials containing asbestos. Public health in Texas should also benefit from a heightened awareness of the threats posed by toxic mold and volatile organic compounds that are all too common in homes, work places and schools. This heightened awareness was fostered by a series of reports in the Austin American Statesman, by homeowner outrage at insurance companies that have tried to eliminate coverage for mold from homeowners' policies, and by the diligent work of Rep. Elliott Naishtat (D-Austin) and Sen. Mike Moncrief (D-Fort Worth).

Requires that a person who removes resilient floor covering material complete a training course covering such work practices for a minimum of eight hours. The statute also repeals the $5,000 limit on civil penalties for violations of the licensing and registration requirements of the Texas Asbestos Health Protection Act concerning resilient floor covering removal.

Would have required school districts to regularly assess the indoor air quality of public school buildings.

Current indoor air quality guidelines for public schools are voluntary and only offer schools general guidance regarding conditions that may cause poor indoor air quality. Indoor air pollutants in schools can come from several sources including furniture, carpeting, walls, ceilings, bookcases, chalkboards, and computers, as well as toxic forms of mold. Schools also have a variety of problem areas such as kitchens, cafeterias, science labs, and cleaning storage areas.

Would have established mandatory indoor air quality guidelines for newly constructed or substantially renovated schools. The bill also would have prohibited a school district from using state funds to make payments on bonds issued for the construction or renovation of a school unless the district obtained a copy of a survey conducted promptly after the construction or renovation is complete that analyzes the facility's overall indoor air quality.

In 1991 the U.S. Fifth Circuit Court overturned a 1989 EPA rule that had banned most uses of asbestos, particularly in building products. Since the court's decision, the use of asbestos has become prevalent once again, despite the fact that schools and other public entities have spent millions of dollars removing asbestos from their buildings. Prior to HB 1927, Texas law required that asbestos be removed from public buildings, but ironically, there was no prohibition against installing new asbestos products in the same buildings. This legal wrinkle resulted in one Texas school removing old asbestos material at the same time that new floor tile containing asbestos was being installed! Thanks to HB 1927, Texas is the first state in the nation to ban the installation or reinstallation of asbestos in public buildings. Rep. Geren's bill establishes a civil remedy for enforcement.

Prohibits a municipality that issues a renovation or demolition permit for a public or commercial building from doing so unless the applicant provides acceptable evidence that an asbestos survey has been completed or a licensed asbestos surveyor, engineer or architect has certified the lack of asbestos in the affected parts of the building. Current law requires a survey for asbestos building materials to be completed and any existing asbestos to be abated before any demolition or renovation of a public or commercial building, but the compliance rate is low. SB 509 should greatly improve compliance. Texas is the first state in the country to establish such a requirement.

SB 5: Incentives for Air Pollution Reductions

A great deal of debate during the 77^th legislative session centered upon the adoption of legislation that would enable Texas to achieve compliance with federal air quality standards. A major piece of legislation that received broad bipartisan support because of its emphasis on incentive-based voluntary emissions reductions is SB 5, sponsored by Sen. Buster Brown (R-Lake Jackson) and Rep. Steve Wolens (D-Dallas). The provisions of this legislation are a direct response to the State Implementation Plan (SIP) adopted by the TNRCC. The bill establishes a program to provide grants and other financial incentives for emissions reductions and alternatives to certain components of the current SIP. The legislation authorizes the TNRCC to manage all program funds and to submit the provisions of the bill as a revision to the SIP.

SB 5 establishes the Texas Emissions Reduction Plan (TERP), a $133 million annual program, with the majority of funds going to non-attainment areas, such as Houston and Dallas. A major component of TERP is the Diesel Emissions Reduction Incentive Program, which provides incentives to construction companies to invest in cleaner-burning diesel engines. These rewards are designed to offset costs for projects that reduce nitrogen oxide emissions from heavy trucks and construction equipment. A major source of funding for this incentive-based program is through surcharges that will be placed on the sale or lease of construction equipment and heavy diesel trucks, as well as heavy truck registration fees.

The TERP program also benefits from a $75,000 per-ton contribution to the incentive fund in exchange for the offset of SIP requirements above reductions in excess of 80% for facilities in the Houston/Galveston and Dallas/Ft. Worth non-attainment areas. As a measure to prevent abuse of this loophole, facilities that exceed the reductions limit must demonstrate compliance within 5 years of the date mandated in the SIP. Further, environmental advocates requested that language be maintained in SB 5 to ensure that funds acquired under TERP by the offset of emissions reductions ordered by the SIP be used to benefit the community in which the offsetting emissions reductions are made.

A contentious aspect of the funding structure of the TERP program is a provision requiring an increase in the first-time car registration fee for out-of-state registrants—a sharp increase from $1 to $255. In contrast, an incentive of the TERP program for car buyers will be the eligibility for cash rebates of up to $5,000 for purchasing certain clean-engine cars such as the Honda Civic.

There are a number of provisions in SB 5 that create an innovative structure of incentives for finding long-term solutions Texas’ air quality crisis:

Texas Natural Resource Conservation Commission (TNRCC)

Sunset Review

The lengthy TNRCC legislative reauthorization process, commonly known as a sunset review, began in 1999 with the appointment of four members of the Texas House of Representatives, four members of the Texas Senate, and two members of the public to the Texas Sunset Advisory Commission.

During the same year, several statewide environmental and public interest organizations joined together under the banner of the Public Interest Sunset Working Group (PISWG). In an ambitious effort, PISWG set out to identify ways that the TNRCC could improve its functions as an agency existing to protect public health, the environment and citizens’ rights. In cooperation with landowners, grassroots community groups and concerned individuals across the state, PISWG compiled a list of recommendations for TNRCC reform. During a two-day public hearing before the Sunset Commission on June 21, 2000, citizen testimonies from across the state made evident a groundswell of concerns that needed to be addressed.

Overall, the Texas Sunset Advisory Commission made significant recommendations to the Legislature for improving the TNRCC, but PISWG and concerned citizens felt its recommendations fell short of the comprehensive changes that were necessary to make the TNRCC a strong pollution control agency.

In the legislative phase of the sunset review process, the Lone Star Chapter joined with 20 religious, consumer and public interest groups in the Alliance for a Clean Texas (ACT). At the advent of the legislative session, ACT joined with PISWG to identify eight priority reform goals for the TNRCC that were not adopted by the Commission. In concert with ACT, several state lawmakers launched a reform agenda at a January 17^th press conference. State Representative Ruth Jones McClendon (D-San Antonio) led the effort with the unveiling of a package of reform legislation.

The unified effort of ACT members and legislators resulted in a number of meaningful reform provisions that will give citizens useful tools to protect themselves from polluters—more than half of the eight original priorities identified in January were achieved or partially achieved in the final version of the TNRCC sunset bill.

The TNRCC sunset bill (HB 2912) and all related legislation were heard in the House Environmental Regulation Committee on March 20^th. During the nine-hour hearing, an impressive showing of citizens and organizations from across the state testified before the committee and Chairman Warren Chisum. All bills were left pending in committee. Some of the reform bills were folded into a revised HB 2912, which was approved by the committee on March 29^th. However, many of the most important reform provisions were left out of the committee rewrite of the bill.

The House floor debate was a promising opportunity for legislators to add a number of floor amendments, many of which were ACT priorities. During the twelve-hour debate, the House considered 150 amendments.

Reform provisions adopted on the House floor as amendments were:

Prior to reaching the Senate Natural Resources Committee, HB 2912 spent a number of suspenseful days in the hands of Sen. Chris Harris (R-Arlington) and his staff as they rewrote the Senate version of HB 2912. When the bill was finally made available just minutes prior to the public hearing, ACT quickly learned that, as suspected and feared, Sen. Harris had either stripped or altered a number of good provisions in the House version, undermining the potential for meaningful reform at the TNRCC. Following is a list of important provisions Harris stripped from the bill that needed to be restored as amendments by the Senate Committee:

The May 3^rd Senate committee meeting consisted of compelling public testimony lasting until midnight. The committee was obliged to reconvene the next day to vote on the Sunset bill and multiple amendments with little time to examine the implications of their votes. Sen. David Bernsen (D-Beaumont) requested postponement of the vote to further examine the legislation, but his request was denied.

Notable amendments considered at the May 4^th meeting were:

In addition to restoring a few critical provisions that were stripped from the House version of HB 2912, ACT focused its efforts for the May 14^th floor debate on supporting Sen. Bernsen’s amendment to close the Grandfather Loophole so that Rep. Chisum’s weaker House amendment would not prevail in the final version of HB 2912.

Reform amendments adopted on the Senate floor were:

· Closure of the Grandfather Loophole, Sen. Bernsen

Required the permitting of grandfathered facilities, including 50% reductions of nitrogen oxide emissions from pipeline facilities in East Texas and the installation of 10 year-old Best Available Control Technology at most grandfathered facilities.

· Raise the Fee Cap on Pollution Volume Discounts, Sen. Barrientos

Raised the 4,000 ton per year cap on pollution fees to 8,000, generating more revenue for

air quality programs and decreasing the anti-competitive burden placed on small businesses.

Only one reform provision was rejected on the Senate floor:

· Change the Mission Statement, Sen. Carlos Truan (D-Corpus Christi)

This amendment would have changed the mission of the TNRCC by completely excluding economic development from the agency’s mission statement.

The House and Senate versions of the bill were sent to a conference committee consisting of Representatives Bosse, Puente, Dukes, Chisum and Counts, and Senators Harris, Bernsen, Bivins, Sibley and Armbrister. The conference committee negotiated a compromise and sent it back to the House and Senate on Sunday, May 28^th, the last day of the session. A comprehensive list of positive reforms adopted in the final version of HB 2912 is as follows:

· Closure of the Grandfather Loophole

Requires permitting of grandfathered facilities, with requirements that grandfathers in the eastern half of Texas install pollution controls by 2006 and pipelines in the East make 50% cuts in annual NOx emissions. For more, see the following section, Grandfather Loophole Closed after 30 Years.

· Consideration of Cumulative Impacts

Requires the TNRCC to develop and implement policies to consider the cumulative impacts of pollution when issuing new permits or expansion permits and to give priority in enforcement and monitoring to areas in which regulated facilities are concentrated. This is an important environmental justice provision that community groups have been seeking for years.

· Increased Public Participation in TNRCC Decision-Making

The Sunset bill gives citizens better access to agency information and a number of new avenues for influencing permitting and enforcement decisions. For example, the TNRCC must now post advisory committee meeting minutes, pending permit and enforcement actions, compliance histories, violations by repeat offenders, and emissions inventories on its website. The TNRCC must also accept complaints via the Internet, keep better complaint files, and conduct an annual complaint analysis. Finally, the TNRCC must accept citizen-gathered evidence in enforcement cases. These are all provisions that industry adamantly opposed.

· Limited Role of Executive Director in Contested Case Hearings

The TNRCC Executive Director (ED) is infamous for defending polluters and opposing citizens in permit hearings. This provision will restrict the ED to participating in a limited number of cases and reduce his or her role to providing administrative information for the record. The ED will also no longer be allowed to help pollution permit applicants meet the burden of proof in contested case hearings.

· Response to After-Hours Complaints

Requires the TNRCC to establish policies for timely response to after-hours complaints.

· Change the Mission Statement

Requires the TNRCC to change the wording of its mission statement from "encourage economic development" to "consider economic development." This language was a compromise between House and Senate versions.

· Broad Definition of Compliance History

Requires the TNRCC to develop a broad definition of compliance history and to use this history in permitting and enforcement decisions, such as whether or not a facility receives an announced or unannounced inspection.

· Increased Accountability for Upset Emissions

Requires the TNRCC to develop a program for the tracking and reduction of upset, maintenance, startup and shutdown emissions. This provision also clarifies the burden of proof for justifying upset, maintenance, startup and shutdown emissions.

· Class B Sludge

This provision requires a permit for the land application of Class B sludge.

· Joint Interim Study on the Role and Authority of the Office of Public Interest Counsel

Requires the Legislature to conduct an interim study on the possible need for an Independent Public Interest Counsel and what role and authority the Counsel might have.

Just as HB 2912 was approved by the House with just one noticeably problematic amendment, so too did the conference report emerge with just one problematic amendment attached—Rep. Capelo’s amendment on the diesel fuel rule.

The Conference Committee failed to adopt a few other important provisions prioritized by ACT. These provisions will likely experience a reincarnation as bills or amendments in the 78^th legislative session:

GRANDFATHER LOOPHOLE CLOSED AFTER 30 YEARS

During the 2000 presidential election campaign, then-Texas Governor George W. Bush touted his voluntary program for asking industrial polluters to clean up plants that had long been exempted from the state’s clean air law. Bush and his staff developed the "Voluntary Emissions Reduction Program"(VERP) prior to the campaign specifically in order to deflect expected criticism that he had done nothing to compel "grandfathered" polluters to reduce the massive amounts of smog-forming materials they produce each year.

When the VERP plan was enacted at the end of the 76^th session in 1999, the program was met by skepticism from environmental advocates who had argued in favor of mandatory controls for grandfathered polluters. Still, when Bush began his campaign for the presidency his VERP program was almost new, and he asked critics to give the program time to yield results. But by the time that Bush assumed the presidency in January 2001—and the Texas Legislature convened its 77^th session the same month—the failure of the VERP program had become painfully obvious: of almost 800 facilities that remained grandfathered in 2000, only one had actually obtained a VERP permit from the TNRCC by the beginning of 2001. The 75 annual tons of grandfathered emissions from the sole permitted facility, Southline Metals of Houston, represented less than one tenth of one percent of the roughly 500,000 tons of air pollution produced by grandfathered facilities in 2000.

The lack of progress in reducing grandfathered air pollution between the 76^th and 77^th sessions was underscored by growing pressure on state policy makers to find solutions to the air quality crisis in Texas’ major cities. Seven metropolitan regions in the state--El Paso, Beaumont/Port Arthur, Dallas/Fort Worth, Austin, Houston, San Antonio, and Longview/Tyler/Marshall—have been declared non-attainment or near non-attainment areas for federal air quality standards. The culmination of the Texas air quality crisis came in 1999 when Houston topped Los Angeles for the number of days in the year that the city violated federal limits on one-hour ozone levels. In effect, Houston had become the smoggiest city in the country. It retained that distinction in 2000.

For the purposes of complying with the federal air quality standards, Texas’ greatest problem is with emissions of "criteria" pollutants such as nitrogen oxide (NOx), and carbon monoxide (CO), key ingredients in smog. According to U.S. Environmental Protection Agency data, Texas led the nation in NOx production in 1998 (latest year for available statistics), with ozone season daily average releases of 5,498 tons. By comparison, California ranked third with daily averages of 3,379 tons. Texas ranked second nationally in releases of carbon monoxide, with 6.7 million tons released in 1998. For a third class of criteria pollutants, volatile organic compounds (VOCs), Texas ranked second nationally with 1.59 million tons released.

In addition to Texas’ heavy smog problem, Texas led the nation in toxic air pollution emissions in 1997 and ranked 2^nd overall in 1998. According to the U.S. Environmental Protection Agency’s Toxic Release Inventory, Texas industries spewed 119 million pounds of toxins into the atmosphere in 1998. While total emissions of these compounds are small compared to the "criteria" air pollutants that create smog—they are measured in pounds, not tons—their potential impact on human health can be great.

While environmental advocates had argued for years that poor air quality in Texas was a major public health problem, it seems that the threat of losing tens of millions of dollars in federal highway funds has been an even more compelling factor in prompting Texas lawmakers and regulators to seek air quality improvements.

In order to reduce emissions of smog-forming materials and other pollutants, policy makers have three primary sources to target: automobiles, heavy industry, and power plants. With grandfathered industries and power plants producing as much nitrogen oxide in 1997 as 18 million automobiles, obtaining emissions reductions from grandfathers became a political imperative.

The need to comply with the federal Clean Air Act, and the abject failure of the VERP program, kept the grandfather issue in the forefront of environmental issues when the 77^th session convened, and left industry and its allies in the Legislature with no cause to argue that a voluntary program was a tenable solution any longer. Indeed, a poll conducted by Opinion Research Services in February 2000 found that 87% of the respondents supported closure of the Grandfather Loophole. Thus the 77^th session began with broad consensus that the grandfather loophole would be closed. The central question to be debated was by what date grandfathered plants would be required to achieve emissions reductions.

When the Legislature enacted the Texas Clean Air Act in 1971, industry representatives pleaded for exemption from the statute, claiming that most of their existing facilities would be retired or modified within 8 years. Lawmakers consented, exempting from the law any facility that was operating or under construction at the time. The Grandfather Loophole was thus born, and all facilities falling through the loophole were effectively exempted from the law. The only way that a grandfathered facility was brought under the standards of the statute was if the facility was modified or expanded, which triggered a requirement that the facility obtain a permit and install modern pollution controls.

Strictly speaking, the designation "grandfathered" means that under Subtitle C, Chapter 382 of the Texas Health and Safety Code, an industrial facility fits within the definition of facilities described in section 382.0518(g), which is to say that they are exempted from the permitting requirements established elsewhere in the chapter. Facilities exempted by section 382.0518(g) did not have to obtain what is called a pre-construction permit from the state environmental regulatory agency, originally the Texas Air Control Board (TACB). By virtue of the circumvention, such grandfathered plants are also generally exempt from associated permit requirements, including public health effects reviews, installation of best available pollution control technology (BACT), and opportunities for the public to request evidentiary hearings on the appropriateness of an industrial facility’s location and emissions allowances.

Consequently, these older facilities have in general not been required to meet BACT standards. This means that many older plants have been authorized to continue to pollute at their pre-1971 levels, with the exception of U.S. Clean Air Act mandates that are gradually taking effect, such as "phase II" acid rain requirements and other applicable rules. Grandfathered plants are, in fact, allowed to increase their emissions by increasing their annual hours of operations, so long as no physical modification is made.

While the types of grandfathered emissions across the state are diverse, the single greatest problem is with nitrogen oxide (NOx), a clear and odorless gas but a primary component in ozone formation. Excessive volumes of NOx emissions is the leading culprit in turning 7 metropolitan regions in Texas into non or near non-attainment areas for federal air quality standards under the U.S. Clean Air Act.

Between 1971 and 1996 the issue of grandfathered plants occasionally arose in public forum, but generally there was little attention paid to the issue.

Grandfathers received initial scrutiny in 1984 during the first sunset review of the Texas Air Control Board (TACB), which is now the air program of the TNRCC. At the time, the agency did not possess an up-to-date database of the numbers of facilities that were grandfathered in the state or their annual criteria emissions.

In 1985, while the Legislature worked to craft a reauthorization bill for the Board, the Lone Star Chapter mounted the first challenge to the Grandfather Loophole by testifying about the continued exemptions from the permitting system and BACT standards. The Legislature generally ignored the problem that year, but did pass legislation requiring a statewide "registration" of all grandfathers. The statute required the TACB to conduct a mandatory "Grandfathered Registration" survey of all such facilities in the state by February 28, 1986, and to submit its finding to the Legislature in 1986.

The TACB report, "Grandfathered Facilities: Summary and Listing of Facilities Registered with the Texas Air Control Board" was issued in November, 1986. The report identified more than 20,000 grandfathered facilities at 888 individual plant sites, but many were insignificant sources such as cotton gins and other small businesses. Therefore the report focused on 6,641large industrial facilities with significant emissions. These larger sources accounted for 1.6 million tons of air pollution in 1985.

When the TACB and TWC were merged by the Legislature in 1991 to create the TNRCC (effective September 1, 1993), a minor error occurred in the legislative language which effectively prohibited grandfathered facilities from continuing to operate without a permit unless the law was amended. Since so many companies desired to continue their grandfathered status and also wanted to be able to obtain permit exemptions at refineries, chemical plants and other major sources, an effort was mounted to amend the law in 1997.

Rep. Ray Allen (R-Grand Prairie) sponsored a bill to allow grandfathers to apply for and receive so-called "standard exemptions" for their grandfathered emissions. One TNRCC Commissioner testified that the agency lacked accurate emissions inventory data on the numbers of grandfathered facilities and their annual emissions totals. The Legislature passed a bill requiring the TNRCC to undertake a new survey of grandfathered facilities in 1997 and make the information public by October 1998.

The subject was brought back to scrutiny in the mid-90s by a series of reports by public interest groups. In 1997, using agency records submitted by the electric utility industry in their Title V permit applications showing which boilers were grandfathered vs. permitted, the Sustainable Energy and Economic Development (SEED) Coalition published The Grandaddy of All Loopholes: How Sixty-Six Texas Power Plants Escape Our State’s Toughest Air Pollution Laws. In April 1998 the Lone Star Chapter of the Sierra Club and the Galveston-Houston Association for Smog Prevention, with assistance from other public interest organizations, produced Grandfathered Air Pollution: the Dirty Secret of Texas Industries.

Using data obtained from the TNRCC, this second report presented statistics on grandfathered facilities and their emissions that the agency had said could not be compiled. (Summary statistics in the report use 1997 data for the total number of grandfathered facilities, annual tonnage of emissions, and other key measures—thus later reports and discussions on the subject frequently use 1997 statistics as a baseline for measurements of progress.)

The report found that at least 1,070 plants (43 percent of the industrial plants active in Texas in 1997) were heavily grandfathered. Other findings included:

· 916 of these plants were fully grandfathered.

· In total, these 1,070 plants were spewing 984,00 tons annually of criteria air pollutants.

· Emissions of criteria pollutants from grandfathered facilities constituted 37 percent of all statewide industrial emissions.

· Grandfathered facilities were producing as much NOx as 18.4 million cars each year.

· Gandfathered plants included virtually every type of industrial classification.

· Electric utilities and petrochemical facilities were leaders in the volume of emissions of criteria pollutants, including NOx.

· The biggest producer of grandfathered emissions in the state, Alcoa’s Rockdale power plant and aluminum smelter, produced 104,000 tons of NOx in 1997, more than that produced by 1 million cars.

But what many of the members of the CARE committee did not know was that the final recommendations that the committee would ultimately make had already been cooked by executives from Exxon and Marathon Oil and the governor’s staff before the committee even had its first meeting.

Thanks to a suit filed by the SEED Coalition under the Texas Open Records Act, it was discovered that the CARE committee was cynically established in order to lend credibility to an industry-crafted pseudo-solution to the grandfather problem.

In a suit filed May 4, 1999, SEED contended that the governor's office had concealed records about the development of the CARE plan. SEED did, however, obtain dozens of memos and notes of meetings held among state officials and industry representatives prior to the formal establishment of the CARE committee.

At one meeting of this working group in June 1997, Gov. Bush’s aide for environmental policy made a joint presentation with Exxon officials on the development of the voluntary program. One representative from a major chemical manufacturer was genuinely surprised by the cynicism of the program, and later wrote in an email to a colleague: "The concept put forward was that the industry group and the Governor’s Office would develop the program, then take it to some broad-based group, including public representatives, who would then tweak it a little bit and approve it."

Notes taken by TNRCC Executive Director Jeff Saitas revealed the level of resistance from industry to taking any steps to actually reduce pollution from grandfathered facilities. According to Saitas’ notes, for example, a representative of Texas Utilities told the group that the "utility industry [is] concerned about [the] entire concept - if it doesn't involve retrofits or $, maybe we can sell it."

Gov. Bush did try to sell it, announcing that after a thorough review by the CARE committtee, the best way to handle grandfathered air pollution would be to ask grandfathers to voluntarily seek permits and reduce emissions. As part of the CARE plan, Bush proposed blanket amnesty for any facility seeking a CARE permit, even if the facility had violated the Texas Clean Air Act by expanding a grandfathered facility without seeking a required permit. (This form of cheating was believed to be widespread.)

Reaction to the CARE program from the press and environmental community was appropriately skeptical,

but Gov. Bush and industry allies in the Legislature pushed ahead with a plan to turn the CARE program into state law in the 76^th session. Health advocates, editorial boards, and thousands of citizens called for mandatory permits and pollution cuts, but the Legislature ultimately opted to pass SB 766, a measure codifying Gov. Bush’s plan under a new name: Voluntary Emissions Reduction Permit program (VERP).

Despite this disappointment, an important exception to SB 766 was made when the Grandfather Loophole was closed for publicly held electric utilities as part of SB 7, the electric utility deregulation bill. The interest by many state leaders and organizations in setting up a competitive environment for electric power provided an opening to use the deregulation bill to crack down on grandfathered power plants.

Thanks to the efforts of Rep. Steve Wolens (D-Dallas), the House sponsor of the bill, a significant number of the largest grandfathered facilities in the state had their grandfathered status repealed and were forced to seek permits by September 1, 2000. By May 1, 2003, once-grandfathered power plants must reduce emissions of NOx by 50 percent and emissions of sulfur dioxide by 20 percent from annual average emissions of those pollutants in 1997.

Due to emissions cuts ordered by SB 7, the remaining inventory of grandfathered emissions was significantly reduced by the time the 77^th Legislature convened in January, 2001. In a report to the Legislature that same month, the TNRCC reported that 494,000 tons of emissions were produced by grandfathered facilities in 2000, meaning that 403,966 tons of emissions had shifted to permitted status since 1997.

While the inventory of grandfathered emissions was cut by almost 50 percent from 1997 levels, the number of facilities still grandfathered in 2000 remained close to the 1997 figure, with 762 facilities still operating without Chapter 382 permits. These facilities included refineries, carbon black plants, paper mills, chemical plants and pipeline facilities such as compressor stations and storage tanks. Collectively, the ten worst remaining grandfathered plants in Texas—including Alcoa’s Rockdale plant--produced roughly 285,000 tons of grandfathered pollution in 2000, over half the remaining total.

Ironically, the 30^th anniversary of the grandfather loophole came during the 77^th session, on March 25.

"When we put in the grandfather loophole we didn’t know any better," said Jim Clark, a former legislator who helped write the 1971 Texas Clean Air Act. "Now we have the information that shows how wrong we were to let all those plants be grandfathered."

By the time the Texas Legislature convened the 77^th session in January, widespread consensus had been reached that the Bush VERP program had been an unequivocal failure. The TNRCC’s January report confirmed that only 74 of the 898,025 tons of the 1997 inventory of grandfathered emissions had been permitted under the VERP program. For all practical purposes the debate over whether to close the loophole and require grandfathers to obtain standard permits was over. The only issues that remained to be resolved were: 1) by what dates grandfathers would be required to apply for permits and install modern pollution controls; 2) what standard for pollution control technology would be required of grandfathers; 3) what requirements for public notice and hearings would be included in the permitting process for grandfathers: and 4) whether to require grandfathered pipeline compressor engines and storage tanks to obtain permits, and what level of emissions reductions those facilities would be required to make.

Two bills introduced during the 77^th session offered competing deadlines for grandfathered facilities to enter the permitting process. The Sierra Club and other environmental advocates favored HB 356 by Rep. Zeb Zbranek (D-Winnie) and companion bill SB 493 by Sen. David Bernsen (D-Beaumont). These bills offered quick compliance timelines that became the starting point for negotiations with industry representatives and legislators in their corner.

The legal mechanism in HB 356 and SB 493 for closing the Grandfather Loophole was simple. The legislation would have repealed the exemption for grandfathered facilities by requiring all grandfathers to file a permit application with the TNRCC by September 1, 2002. Facilities not filing applications by that date would be considered to be operating without a permit, and would have faced applicable sanctions under existing law. Zbranek and Bernsen’s legislation required grandfathered plants to adopt current "Best Available Control Technology" as the standard for the level of pollution controls they would put in place. The bills also protected the public rights of notice, comment and opportunity to request a contested case hearing that are standard in the Texas permitting process for plant expansion and new sources.

HB 3545 by Rep. Warren Chisum (R-Pampa) offered compliance timelines that were preferred by industry associations and grandfathered facilities, and represented industry’s starting point for negotiations. These timelines were drawn to give grandfathered facilities far longer to apply for and obtain permits than the Zbranek and Bernsen bills allowed.

HB 3545 was the first bill to offer a two-track approach for grandfathered facilities in different regions to obtain permits on separate schedules. Under Rep. Chisum’s bill grandfathered plants in regions that had been declared air quality non-attainment areas as of Sept. 1, 2001 would have been required to apply for a permit by Sept. 1, 2003, while grandfathered plants in attainment areas would not have been required to apply for a permit until Sept. 1, 2005. While the Sierra Club and other environmental groups thought these timelines were too slow, especially for grandfathers in attainment areas, Rep. Chisum’s two-track system gained currency and most proposals that followed incorporated Chisum’model, albeit with significant modifications.

Rep. Chisum’s bill also provided special exemptions for pipeline facilities by exempting them from the general requirements in his bill for other classes of grandfathered facilities. Under HB 3545, the TNRCC would have been left to determine in which counties or regions of the state grandfathered natural gas pipeline facilities would be required to cut emissions of nitrogen oxide and volatile organic compounds. For areas where the TNRCC decided to require cuts, the agency would have been limited by statute from ordering more than a twenty percent reduction in NOx and VOCs from 1997 emissions levels. Moreover, Rep. Chisum’s pipeline provision would have required the TNRCC to issue a single permit for an entire pipeline, regardless of the number of compressor facilities along the length of the pipeline, and allowed emissions reductions to be made entirely at one source or averaged among multiple sources along a pipeline.

HB 356 and 3545 were both considered in a hearing on March 27 by the House Committee on Environmental Regulation. Testimony was extensive, but the committee left both bills pending in order to allow Representatives Zbranek and Chisum to negotiate a compromise.

Ultimately, efforts to forge a compromise bill did not bear fruit, and Rep. Zbranek determined that offering an amendment to close the loophole to the TNRCC sunset bill was the best way to force industry to negotiate and keep the issue in play. When the TNRCC sunset bill (HB 2912) came to the floor of the House on April 19, Zbranek offered an amendment that drew on Chisum’s two-track compliance schedule. Zbranek’s amendment required plants in the "East Texas region" (defined as all counties traversed by or east of Interstate Highway 35 north of San Antonio or traversed by or east of IH 37 south of San Antonio, as well as Bexar, Bosque, Coryell, Hood, Parker, Somervell, and Wise counities) and the "El Paso region" (El Paso County) to apply for permits by September 1, 2002 and meet all permit requirements, including emissions reductions, by September 1, 2005. For plants in the "West Texas region" (all counties not in the East Texas or El Paso regions) those dates were September 1, 2003 and September 1, 2006, respectively.

While Chisum provided a longer period for plants in attainment areas to apply for and obtain permits, Zbranek’s amendment offered more time to plants in the west, other than El Paso. The difference between Chisum’s attainment/non-attainment model and Zbranek’s east/west model is that Chisum’s plan grouped dozens of grandfathered plants in East Texas attainment areas in the slower track, despite the fact that emissions from those plants have an almost direct impact on air quality in six non-attainment and near non-attainment areas. Since NOx, VOCs, particulate matter and other pollutants are easily transported by wind over long distances, it was crucial to include all grandfathers in East Texas in the fast track clean-up schedule.

As for public notice and hearing requirements, Zbranek’s amendment applied the standard provisions of Section 382.056 of the state air quality code to grandfathers applying for permits. Practically speaking, this meant that a grandfathered facility would have to publish notice of a permit application in a local newspaper, citizens would have an opportunity to comment on the proposed permit during a public comment period, public meetings could be held on the matter, and potentially affected parties would be afforded an opportunity to request a contested case hearing on the permit. However, in order to provide grandfathers and incentive to make large and quick emissions cuts, Zbranek’s amendment provided that if a grandfathered facility’s draft permit calls for a 40 percent or more cut in emissions from 1997 levels, the plant’s permit would be exempted from a contested case hearing challenge.

Chisum responded to Zbranek’s amendment by offering a version of HB 3545 as a 2^nd degree amendment to Zbranek’s. After extensive debate, Zbranek motioned to table Chisum’s amendment. Zbranek’s motion failed by a vote of 45 to 98 (House Record Vote #154; Sierra Club House record vote #3, p. 53), keeping Chisum’s proposal in play.

Next, Rep. Pete Gallego (D-Alpine) offered an amendment seeking to toughen the standards for pipeline emissions reductions in Chisum’s amendment. As noted above, Chisum’s proposal allowed the TNRCC to require no more than a 20 percent reduction in emissions from selected pipelines. Gallego sought to raise the ceiling on pipeline reductions to no more than 50 percent of current emissions of NOx and VOCs. Despite spirited debate, Gallego’s amendment was rejected by a vote of 47 to 96 (House Record Vote #155).

Debate on the grandfather issue concluded when Rep. Chisum’s amendment was affirmatively accepted on a 91-22 division vote, followed by a voice vote accepting Zbranek’s underlying amendment. The net result was that the House agreed to close the grandfather loophole, but with the later deadlines and lax standards for pipelines offered by Rep. Chisum.

The Senate took up consideration of HB 2912 on May 15. By that time environmental advocates had thoroughly canvassed the Senate on the issue and found broad support for strengthening the provisions on grandfathered facilities in HB 2912. While the provisions on grandfathered facilities were not altered when the Senate Natural Resources Committee approved HB 2912, the bill was successfully amended by Senator David Bernsen on the Senate floor. Just as debate on HB 2912 was far more subdued in the Senate than in the House, Sen. Bernsen’s amendment (Senate #F26A) was accepted by the Senate with far less controversy. With bipartisan support, Bernsen’s amendment was adopted by a vote of 22 to 7 (Sierra Club Senate Record Vote #3, p. 58).

The Bernsen amendment requires all grandfathered facilities to apply for permits by September 1, 2003 if the facility is located in the East Texas or El Paso regions, and by September 1, 2004 if the facility is located in the West Texas region. The agency must take action on all applications within a year of receiving a complete application. In addition, grandfathered facilities must comply with all conditions of their permits, including installation of emissions controls or reductions of emissions of air contaminants, by March 1, 2007 for facilities in the East and El Paso regions and March 1, 2008 for facilities in the West.

Bernsen’s version calls for the installation of 10 year-old Best Available Control Technology (in the year that retrofitting take places) at most grandfathered facilities.

In addition to the improvements on application and compliance deadlines, Sen. Bernsen managed to improve Rep. Chisum’s provisions on pipelines. Like Chisum’s amendment, Bernsen’s directs the agency to issue a single permit to all facilities along the length of pipeline, and allows mandatory emissions reductions to be achieved at one source or by averaging reductions among multiple sources along a pipeline. However, Bernsen’s amendment stipulates that for reductions that are achieved by averaging, the average may not include reductions achieved in order to comply with other state or federal laws. And while Chisum’s amendment allowed the agency to require no more than 20 percent reductions in emissions from pipelines in selected regions, Bernsen’s amendment stipulates that the agency can permit a pipeline internal combustion engine in the East Texas or El Paso regions only if the permit requires at least a 50 percent reduction in hourly emission rates of nitrogen oxide.

As for public notice and hearing requirements, Bernsen’s amendment provided the standard procedures for pre-construction permits found in Texas Clean Air Act. An exception was made for "small business stationary sources," which were authorized to provide notice using alternative means if "the commission finds that the proposed method will result in equal or better communication with the public, considering the

Ultimately, the bulk of Bernsen’s amendment was kept intact when the House-Senate conference on HB 2912 approved a unified version of the bill. The conference report maintained the permitting and compliance deadlines from the Bernsen amendment, the public notice and hearing requirements, and the requirement that all permits for grandfathered internal combustion engine pipeline facilities in the Eastern region require nitrogen oxide reductions of at least 50 percent. Compromise is necessary in most legislative negotiations, and concessions were made to West Texas legislators on pipelines in the Western region. The conference report allows the agency to require no more than 20 percent reductions in nitrogen oxide and volatile organic compounds from pipelines in the West as a condition of receiving a permit.

In addition to this relaxed standard for West region pipelines, the conference report shifted permitting and compliance deadlines for all grandfathered facilities in El Paso County from the East (2003/2007) to the slower track for the West region (2004/2008). This shift most likely reflects the desire of El Paso-area legislators to secure relaxed enforcement policies in light of claims that air quality improvements have been made recently in El Paso. It may also indicate a sense of resignation on the part of Texas legislators that no great improvement can be made in El Paso’s air quality until a bilateral agreement is reached with Mexico to reduce industrial and automobile emissions in Ciudad Juarez.

While El Paso is the only city in West Texas with serious air quality problems, atmospheric transport of pollutants across the state may be a very serious problem, particularly for the Big Bend region, where the prevalence of unnatural haze in the spring and summer has caused dramatic reductions in visibility.

Expressions of concern about regional air quality from area residents and visitors to Big Bend National Park prompted the U.S. Environmental Protection Agency and the National Park Service to undertake an e