Texas Facility Alert: Compliance History

Overview: The Texas Attorney General recently issued an opinion that concluded that the 5-year compliance history period adopted by the Texas Natural Resources Conservation Commission (TNRCC) does not violate the prohibitions against retroactive application of laws under the Texas Constitution.

Discussion: In the last legislative session (2001), the Texas legislature mandated TNRCC to develop rules that would take into account a facility's compliance history during permitting and enforcement actions.

In January of this year, TNRCC issued "Phase I" of the rules which defined what compliance history could entail and, in a controversial step, determined that TNRCC could consider a facility's compliance history for the past five years, prior to the effective date of the statute, which is February 1, 2002. Industry advocates and some members of the Texas legislature had urged TNRCC to allow facilities to start with a "clean slate" beginning February 1, 2002 rather than "retroactively" apply the rules.

Late last year, Representative Warren Chisum, Chair of the House Committee on Environmental Regulation, requested that the Texas Attorney General review the constitutionality of the TNRCC's regulatory interpretation. The AG's opinion concluded that the five-year compliance history did not facially violate the prohibition against retroactive laws under the Texas Constitution. In doing so, the AG determined that because the compliance history laws are adopted to protect the public health, safety and welfare, the Legislature is "not precluded from enacting statutes that are necessary to safeguard these interests."

Notably, on August 7, 2002, the Commission of the TNRCC will take up at its scheduled Agenda the adoption of Phase II of the compliance history rules. Phase II, as proposed, provides formulas for evaluating a facility's compliance history and for classifying facility's into categories (from poor to good).

If you have questions, please contact Madeleine Kadas at [email protected] or 512-391-8010.