Agency Highlights

Environmental Protection Agency (“EPA”)

EPA ends temporary COVID-19 enforcement policy. In a memo from June 29, 2020, EPA announced that its temporary policy on “enforcement discretion” during the COVID-19 pandemic will end on August 31, 2020. The temporary enforcement policy—which began on March 26, 2020—indicated that EPA would not take enforcement action for certain forms of noncompliance resulting from the COVID-19 pandemic. The policy noted that EPA generally does not expect regulated entities to “catch-up” with missed short-term monitoring or reporting requirements. EPA’s memo announcing termination of the policy reserves the agency’s ability to “exercise enforcement discretion on a case-by-case basis” even after the policy’s end date.

EPA finalizes rule requiring lead-free certification for certain drinking water fixtures. On September 1, 2020, EPA published a final rule that tightens requirements for lead free “pipes, pipe or plumbing fittings, or fixtures, solder, or flux” in public drinking water systems. The rule—which takes effect on October 1, 2020—sets out two main parts: (1) a prohibition on “use and introduction into commerce” of leaded water fixtures, and (2) certification requirements for “lead free” plumbing products.

First, the rule prohibits the use of “pipes, pipe and plumbing fittings, fixtures, solder and flux that are not lead free.” “Lead free” means not more than a weighted average of 0.25 or 0.2 percent lead, depending on the product. EPA’s prohibition on leaded fixtures applies to any “person” as defined under the Safe Drinking Water Act (“SDWA”), which includes individuals and municipalities. While the rule does not mandate the replacement of any existing water systems including “lead free” fixtures, it does require lead free fixtures for any “installation or repair” of (1) a public water system or (2) any plumbing in a residential or nonresidential facility or location that provides water for human consumption.

Second, the rule requires certain “manufacturers and importers” of plumbing fixtures to obtain third-party certification for lead free products. The rule does not, however, impose any type of labeling requirements.

The rule contains two main enforcement provisions: EPA can (1) obtain information and records from any “person” to determine compliance with these rules and (2) take enforcement action for noncompliance (including injunctive relief, declaratory relief, civil penalties, or criminal penalties).

The final rule will be codified in 40 CFR Part 143.

EPA’s COVID-19 enforcement discretion guidance terminates, while TCEQ’s remains active. In the April 2020 edition of The Lone Star Current, we reported on both the TCEQ and EPA COVID-19 enforcement discretion guidance policies, which allow regulated entities to seek enforcement discretion from the respective agencies for non-compliance issues caused by COVID-19. EPA’s policy terminated on August 31, 2020 and so now that agency will revert back to its pre-COVID enforcement policy. However, the EPA has not yet announced a termination date for its related enforcement policy for remediation obligations, the Interim Guidance on Site Field Work Decisions Due to Impacts of COVID-19. TCEQ has not yet announced plans to terminate or revise its policy.

EPA proposes metrics for U.S. National Recycling Goals. EPA is accepting comments through October 2, 2020 on its proposed metrics for national recycling goals to be announced at the America Recycles Summit on November 17, 2020. EPA developed the metrics as part of the agency’s National Framework for Advancing the U.S. Recycling System and a congressionally-mandated National Recycling Strategy. These metrics and their associated national recycling goals will represent the first time that the federal government has set an objective for recycling at a nationwide level. The proposed metrics are broken down in the following categories: (1) System-Wide Recycling Measures to Assess Recycling Performance; (2) Reducing Contamination in the Recycling Stream; (3) Increasing Materials Processing Efficiency; and (4) Strengthening Markets for Recycled Materials.

EPA Releases Pre-Publication Final Rule to Formalize Guidance Document Process. In the July 2020 edition of The Lone Star Current, we reported that EPA published a proposed rule to revise the agency’s practice of organizing, evaluating, and issuing guidance documents subject to an Executive Order titled, Promoting the Rule of Law Through Improved Agency Guidance Documents in order to increase the transparency of its guidance practices and improve the process used to manage its guidance documents. On September 14, 2020, EPA released a pre-publication version of the final rule. More specifically, the stated purpose of the rule is to ensure EPA guidance documents:

• Are developed with appropriate review;
• Are accessible and transparent to the public;
• Are subject to public participation;
• Meet standards established for guidance documents and “significant guidance documents”; and
• Contain procedures allowing public petition to modify or withdraw an active document.

The final rule will be effective 30 days after its publication in the Federal Register.

EPA Proposes to Maintain Ozone NAAQS at Current Levels. On August 14, 2020, EPA released a proposed action to retain the current National Ambient Air Quality Standards (“NAAQS”) for ozone, without revision. The current ozone NAAQS were set at 70 parts per billion for both primary and secondary standards in 2015. The Clean Air Act requires EPA to review the NAAQS at least every five years for updates. In EPA’s proposal, the agency indicates that the 2015 primary standard “protects public health with an adequate margin of safety, including the health of at-risk populations,” and that this analysis is supported by the review of independent advisors and the Clean Air Scientific Advisory Committee.

EPA is accepting public comments until October 1, 2020.

EPA Proposed Greenhouse Gas Standards for Aircraft. On August 20, 2020, EPA published its first-ever proposed rule to regulate greenhouse gas (“GHG”) emission standards emitted by aircraft. The proposed rule stems from EPA’s finding in 2016 that certain aircraft GHG emissions cause or contribute to elevated atmospheric concentrations of GHGs, endangering public health and welfare through climate change. EPA relied on the 2017 Airplane C02 Emission Standards established by the United Nations’ International Civil Aviation Organization (“ICAO”).

According to EPA, the agency chose standards equivalent to ICAO because the standards have “substantial benefits for future international cooperation” on aircraft emissions, which the agency deemed “key for achieving worldwide emission reductions.”

The proposed rule would not apply to certain smaller aircraft or those covered by various exemptions identified in the proposed rule. The proposed rule would require certain new aircraft to meet a “fuel efficiency” metric based on the weight and design of the aircraft. In addition, the proposed rule would not require emission reductions more stringent than the ICAO standards.

The comment period closes on October 19, 2020.

U.S. Fish and Wildlife Service (“FWS”)

FWS proposes two definitions for the term “habitat” under the Endangered Species Act. On August 5, 2020, FWS and the National Marine Fisheries Service jointly proposed a regulatory definition and an alternative regulatory definition of “habitat” under the Endangered Species Act.

The primary proposal defines “habitat” as “physical places that individuals of a species depend upon to carry out one or more life processes” and further clarifies that habitat “includes areas with existing attributes that have the capacity to support individuals of the species.”

The alternative proposal defines “habitat” as “the physical places that individuals of a species use to carry out one or more life processes,” also adding that habitat “includes areas where individuals of the species do not presently exist but have the capacity to support such individuals, only where the necessary attributes to support the species presently exist.”

The proposed rule solicited comments on whether species “depend upon” (primary proposal) or “use” (alternative proposal) their respective habitats. FWS also solicited comments on the second sentence of the alternative proposal, which excludes areas that have no “present capacity” to support individuals of a species. The public comment period closed on September 4, 2020.

U.S. Department of Justice (“DOJ”)

DOJ announces that it will avoid pursuing Clean Water Act civil enforcement cases that overlap with state actions. On July 27, 2020, Assistant Attorney General Jeffrey Bossert Clark issued a memo stating that the DOJ will “strongly disfavor” bringing any action under the Clean Water Act (“CWA”) if a state has “already initiated or concluded its own civil or administrative proceeding” on the same issue. Citing federalism concerns and the need to avoid “piling on” enforcement actions, the memo notes that express prior approval is needed for any DOJ action if a state has already initiated or concluded its own action. Approval for an additional federal action will only be granted under specific circumstances (for example, if “standing on the prior state enforcement action would amount to an unfair windfall to the would-be defendant”). The DOJ’s new policy for CWA actions applies only to civil actions, not criminal actions.

U.S. Army Corps of Engineers (“USACE”)

USACE proposes to renew existing Nationwide Permits (“NWPs”) and add five new NWPs. On September 15, 2020, USACE published a proposal to reissue 52 existing NWPs and add five new NWPs. The new NWPs authorize certain activities related to (1) seaweed mariculture, (2) finfish mariculture, (3) utility lines for water, sewage, and other substances, (4) electric utility lines and telecommunications lines, and (5) water reuse and reclamation facilities. The public comment period for this proposal will close on November 16, 2020. After reviewing public comments, USACE will prepare final NWPs to replace the existing set, which were authorized in 2017.

Texas Commission on Environmental Quality (“TCEQ”)

TCEQ announces new leaders in four top positions. On August 10, 2020, TCEQ announced that it filled four top leadership positions in the agency. Ramiro Garcia (formerly deputy director of the Office of Compliance and Enforcement) and L’Oreal Stepney (formerly deputy director of the Office of Water) will both serve as the TCEQ’s new deputy executive directors. Earl Lott (formerly director of the Water Permits Division) will now serve as deputy director of the Office of Water. Craig Pritzlaff (formerly an Assistant Attorney General in Texas’s Office of the Attorney General) will lead the Office of Compliance and Enforcement. Additional information on each agency leader can be found here.

TCEQ finalizes rule requiring public water systems to provide notice to customers before terminating fluoride addition. On August 26, 2020, TCEQ finalized a rule that creates notice requirements for any public water system that stops adding fluoride to its water. A public water system may not terminate fluoridation unless it (1) provides written notice to its customers (using direct delivery methods) at least 60 days before termination and (2) provides written notice to the TCEQ Executive Director at least 60 days before termination, as well as a copy of the notice and a Certificate of Delivery certifying that public notice was sent to its customers. The new rule took effect on September 17, 2020.

TCEQ to adopt final rule allowing for the use of electronic mail for application deficiency notices and responses. On May 15, 2020, the TCEQ published a proposed rule to amend Section 281.18 of Title 30 of the Texas Administrative Code concerning Applications Processing, in order to allow for the use of electronic mail for application deficiency notices and responses. Currently, Section 281.18 requires that notices of application deficiencies be sent to the applicant via certified, return receipt mail and allows the applicant 30 days to respond. The TCEQ Commissioners are scheduled to consider the proposed rule for adoption as a final rule during the October 7, 2020 Commissioners’ agenda. According to TCEQ, the adopted changes will: (1) modernize communications between the agency and applicants; (2) reduce TCEQ postage costs; and (3) improve the efficiency of application processing. TCEQ indicates that applicants will benefit from a more efficient permit processing time, especially those seeking new permits or amendments to existing permits.

If approved by the TCEQ Commissioners, the effective date is anticipated to be October 29, 2020.

TCEQ Proposes Rulemaking to Implement HB 1331, HB 1435, and HB 1953. On October 7, 2020, the TCEQ Commissioners are considering adopting a final rulemaking (2019-1389-RUL) aimed at implementing House Bill (“HB”) 1331, HB 1435, and HB 1953 passed this last legislative session (86th Texas Legislature, 2019).

HB 1331 created new Texas Health and Safety Code (“THSC”) § 361.0675 to require the TCEQ to increase the application fee for a permit, or major permit amendment, for a municipal solid waste (“MSW”) facility from $100 to $2,000. The rulemaking amends 30 Texas Administrative Code (“TAC”) §§ 305.53(a)(7) and 330.59(h)(1) to implement these changes. This results in a total application fee of $2,050 as TCEQ rules also require that the application fee include an additional $50 to be applied toward notice costs.

HB 1435 amended THSC § 361.088 to require the TCEQ to confirm information included in an application for a permit for an MSW management facility by performing a site assessment of the facility before the agency issues an authorization or issues a permit or a major permit amendment. The rulemaking amends 30 TAC § 330.73(c) to implement these requirements.

HB 1953 created new THSC § 361.041 and amended THSC §§ 361.003, 361.119, and 361.421 to exempt from regulations the beneficial conversion of plastics and recoverable materials using pyrolysis and gasification processes from regulation as an MSW facility. The rulemaking amends 30 TAC §§ 330.3 and 330.13 to add and amend definitions and activities to exempt pyrolysis and gasification of post-use polymers from regulation under Chapter 330. According to TCEQ, the rulemaking is aimed at reducing the regulatory burden to begin pyrolysis or gasification activities using recyclable materials.

In addition, the rulemaking will repeal TCEQ rules determined to be obsolete as a result of the Quadrennial Rules Review of 30 Texas Administrative Code Chapter 330, Subchapter F, Analytical Quality Assurance and Quality Control. The rulemaking indicates that the repealed rules are no longer necessary because
Subchapter F expired on January 1, 2009 and the agency uses other guidance documents to implement data quality controls and sampling guidelines.
The anticipated effective date of the rulemaking is October 29, 2020.

TCEQ Announces Potential Revisions to Penalty Policy. TCEQ recently announced that the agency is considering potential significant revisions to its current penalty policy and compliance history rules.

On September 14, 2020, the TCEQ Enforcement Division submitted an Interoffice Memorandum to the TCEQ Commissioners’ Work Session regarding potential revisions to the agency’s penalty policy. The TCEQ Commissioners deliberated on the potential revisions during a Work Session on September 24, 2020.

The penalty policy was last revised on April 1, 2014. Since then, statutory changes have occurred, and according to TCEQ, recent incidents (including fires and explosions at industrial sites) “have caused significant impacts to the public and the environment demanding accountability within the bounds of TCEQ authority.”

The revisions under consideration include:

• Increasing the percentage of the maximum statutory penalty for alleged violations involving actual releases of pollutants. For example, the recommended penalty for an alleged violation involving a major harm from a minor source will be adjusted from 30 percent to 50 percent of the maximum penalty. Similar adjustments are under consideration for alleged violations involving a moderate or minor harm.
• Increasing (and in some cases, doubling) the percentage of the maximum statutory penalty for programmatic alleged violations. These include operating without a permit or authorization, or failing to maintain proper records or submit reports.
• Increasing the number of violation events for any form of alleged continuing violations. For example, a single monthly violation event may be considered four weekly violation events, thereby resulting in a significantly increased penalty.
• Removing eligibility for the 20 percent expedited enforcement penalty deferral for facilities for which there are two or more prior final administrative orders for violations in the same environmental media.
• Enhancing the penalty by 20 percent for a reportable emissions event occurring in counties with a population of more than 75,000 residents.

The proposed changes are not subject to formal rulemaking, but TCEQ is accepting comments until October 30, 2020. The comments will be presented to the Commissioners for their consideration at a future Work Session. Comments can be submitted to penalty_policy@tceq.texas.gov. Please visit TCEQ’s webpage about the revisions for further information.

In addition to the penalty policy revisions, TCEQ has started the rulemaking process to revise its compliance history rules in 30 Texas Administrative Code Chapter 60. This future rulemaking would allow the agency to change a site’s compliance history classification to a new classification (called “under review”) if that site “has caused, suffered, allowed, or permitted the creation of exigent circumstances,” such as a major explosion or fire that impacts the surrounding community and environment. By changing the site’s compliance history to “under review,” the agency would have a specified length of time to determine the final appropriate classification. The anticipated proposal date for this future rulemaking (Project No. 2020-049-060-CE) is December 16, 2020.

Texas Water Development Board (“TWDB”)

TWDB proposes a new rule allowing groundwater conservation districts to authorize production of brackish groundwater. On August 21, 2020, TWDB issued a proposed rule that designates a permitting process for producing brackish groundwater for (1) municipal drinking water projects and (2) electric generation projects. The proposed rule would define a “brackish groundwater production zone” and a “brackish groundwater production zone permit.” It would also clarify how TWDB designates brackish groundwater production zones, outline how TWDB will conduct assessments and technical reviews on these permits, and describe how TWBD will investigate and conduct technical reviews of annual reports if requested to do so by a groundwater conservation district. The public comment period for this proposed rule closed on September 21, 2020.

Public Utility Commission (“PUC”)

Lone Star Transmission Rate Reduction Settlement. In August, 2020, the Oncor Cities Steering Committee (“OCSC”) and other parties reached a rate related settlement with Lone Star Transmission (“Lone Star”), a transmission-only electric utility with facilities located primarily in West Texas. OCSC has historically participated in Lone Star rate cases because the transmission charges apply to customers throughout the state. Under a Public Utility Commission rule, Lone Star was required to file a rate case by December 8, 2020.

However, Lone Star, PUC Staff, and other participating parties reached an agreement replacing Lone Star’s obligation to file a rate case. The agreement, filed in PUC Docket No. 51206, reduces Lone Star’s annual revenue requirement by $5.3 million and requires Lone Star to file for an adjustment to its transmission rates to give effect to this reduction by December 8 of this year. Further, the prudence of any new investment by Lone Star since its last rate case would be considered in its next rate case, which will occur in four years.

PUC Staff’s analysis of the settlement determined that the $5.3 million reduction brings down Lone Star annual revenues to its authorized rate of return pending its next full rate review in four years.

PUC approved the settlement at the September 24, 2020 open meeting.

EECRF Update: Oncor & TNMP Settlements Approved by PUC; AEP and CenterPoint Await PUC Approval. Each year, electric utilities’ file Energy Efficiency Cost Recovery Factor (“EECRF”) pleadings to adjust their rates for 2021 to reflect changes in program costs and performance bonuses. The EECRF filings also true-up any prior energy efficiency costs over- or under-collected, pursuant to the Public Utility Regulatory Act (“PURA”) and PUC rules. The PUC approved EECRF settlements for Oncor Electric Delivery Company, LLC (“Oncor”) and Texas-New Mexico Power Company (TNMP) at its September 10, 2020 Open Meeting. Oncor will collect $64,782,106 in 2021, and TNMP will collect $5,921,913 in 2021. At the September 24, 2020 open meeting, the Commission approved the EECRF settlement for AEP Texas Inc. (AEP Texas) in the amount of $20,431,462 for 2021.

CenterPoint Energy Houston Electric, LLC (“CenterPoint”) has settled to recover $48,796,013 in rates in 2021, but the settlement will still need to be approved by the PUC at an open meeting.

Under the proposed agreements, the new rates for each company would go into effect on March 1, 2021.

PUC Considers Emerging Electric Vehicle Issues. In recent years, electric industry regulators nationwide have contended with issues arising from electric vehicles (“EVs”). PUC has opened a project to consider these questions — Project No. 49125 — and has sought comments from interested parties on a variety of issues.

EVs present challenges and opportunities to Texas’ entire utility framework. By potentially shifting a portion of the state’s very large energy needs arising from transportation onto the electric system and away from gasoline, the increasing usage of EVs has caused the PUC to consider what changes to our system need to be made to accommodate this technology.

OCSC filed comments in Project No. 49125 in August and generally argued that the current Texas deregulated market model can accommodate increased EV usage. Specifically, OCSC argued that EV charging stations should not be owned and operated by electric utilities (like Oncor and CenterPoint) but rather ownership should be left to competitive third parties. This would mean that difficult and risky decisions about EV charging stations — such as where to locate them and what kind to offer — would be left to the private market. In reaching this conclusion, OCSC determined that ownership and operation of an EV charging station is not a retail sale of electricity, and, as a result, any entity could own and operate one.

The municipal coalition also argued that any distribution infrastructure associated with an EV charging station should be treated for ratemaking purposes in the same manner as distribution investments are handled by regulators now.

Analysts expect a surge in electric vehicle use within just a few years, with projections of $300 billion in electric vehicle investment in EVs worldwide within a decade. By 2030, electric vehicles could comprise as much as 15 percent of all vehicles on Texas roads, according to analysts.

At this point, Project No. 49125 is at an informal stage, with the PUC asking interested parties for comments, and with no rule yet proposed.

Entergy Details Impact of Hurricane Laura at PUC Open Meeting. Hurricane Laura will go down in the record books as the strongest storm to hit Louisiana since 1856 and has tied for the fifth strongest to make landfall in the continental U.S. She made landfall in Cameron, Louisiana as a catastrophic Category 4 hurricane with maximum sustained winds of 150 mph. At the September 10 PUC Open Meeting, a representative from Entergy Texas detailed the impacts of Hurricane Laura and the efforts of utilities to restore service to affected areas. This historic storm caused severe damage to Entergy’s electrical transmission and distribution systems across both Louisiana and Texas. Over 290,000 Texas customers lost power after the August 27 landfall.Laura damaged sixty miles of transmission facilities affecting sixty-three separate lines and thirty-nine substations. On the distribution side, over 1,000 utility poles were damaged along with 211 transformers.

Damage from Hurricane Laura eliminated much of the redundancy built into the transmission system, making it difficult to move power around the region to customers. The degradation of these facilities required Entergy to shed over 300 megawatts of load with little notice. Only one of nine Texas transmission lines remained in service after the initial damage.

To quickly repair its facilities, Entergy deployed over 16,000 employees and contractors working around the clock to repair critical infrastructure. One of the first items mended was a 500 kV transmission line serving Texas. This critical line was repaired within sixteen hours, restoring power to core customers and providing some redundancy and flexibility to the underlying system.

Four of the nine major transmission lines that power Entergy Texas remain out of service as a result of significant storm damage. Several transmission structures within these lines were damaged beyond repair and require complete replacement.

The Commissioners thanked Entergy, utilities, and cities from other areas of the state for sending resources and workers to help the affected area. Utilities are still working to fully restore power to all customers.

PUC Denies Petition for Rulemaking Regarding Texas Universal Fund. The PUC recently emphasised its intent to have the Texas Legislature address the shortfall in revenues in the Texas Universal Service Fund (“TUSF”). In June the PUC rejected a proposal by PUC Staff to increase the TUSF assessment rate from 3.3% to 6.4%, and instead recommended that the Legislature address the issue with TUSF funding. The PUC decided to leave the TUSF as is, but limit TUSF funding to lifeline projects.

In response, the Texas Telephone Association (“TTA”) and Texas Statewide Telephone Cooperative, Inc. (“TSTCI”) (together, the Associations) filed a petition for rulemaking in Docket No. 51020, asking the PUC to reconsider its inaction to adjust the assessment rate, and its decision to only fund lifeline projects, leaving high-cost programs unfunded. The Associations claimed that the PUC’s inaction on the impending TUSF shortfalls was unprecedented and illegal.

At its open meeting on August 27, 2020, the PUC shot down the Associations’ petition, in line with a memo filed by Chairman Walker. Her memo explained that the PUC already made clear its intent to let the Legislature handle the TUSF shortfall, due to the magnitude of the decision and the importance of the related policy issues. She emphasized that nothing had occurred since their initial decision to leave the TUSF untouched, and therefore, nothing had changed her mind on their decision.

DCRF Settlements Approved by Commission. As we have previously reported, in early April 2020, electric utilities filed applications with the PUC to amend their Distribution Cost Recovery Factors (“DCRFs”). Utilities file DCRF proceedings to update the DCRF Rider and Wholesale DCRF (“WDCRF”) Rider in their tariff to include additional distribution invested capital placed in service since their last full base rate case.

The parties have settled the DCRF cases for Oncor (Docket No. 50734), Texas-New Mexico Power Company (“TNMP”) (Docket No. 50731), and AEP Texas, Inc. (“AEP Texas”) (Docket No. 50733). Pursuant to the agreements, Oncor will increase distribution rates by $69.9 million annually; TNMP will increase distribution rates by $14.3 million annually; and AEP will increase distribution rates by $39.1 million annually.

At the July 31, 2020 open meeting, the PUC approved the Oncor and AEP DCRF settlements with minor changes from Chairman Walker to the proposed orders. Later, at the August 13, 2020 open meeting, the PUC approved the TNMP DCRF settlement with minor changes from Chairman Walker to the proposed order.

Pursuant to the final orders, the agreed rates for each Company’s DCRF became effective September 1, 2020.

SPCOA Update. The pace of filings for SPCOA relinquishment or terminations has slowed; it appears that PUC Staff is winding up its housecleaning of certificates that are not being used, or certificate holders who have not complied with reporting requirements. One new filing is by Voxbeam Telecommunications, Inc. (Docket No. 51235). Voxbeam has filed to relinquish its SPCOA, citing the fact that it has no customers in Texas, and its business plans have changed so that it does not expect to have customers in the state.

For filings that have previously been reported, relinquishment requests have been approved for Advanced Integrated Technologies (Docket No. 50272), Comity Communications, LLC (Docket No. 50620), and NDS Technologies, LLC (Docket No. 50759).

PUC Announces Intent to Audit Telecommunications Companies’ Use of Universal Fund. The TUSF controversy continues at the Commission. The Commission has been tangling with how to address a shortfall in the TUSF. In June the PUC rejected a proposal by PUC Staff to increase the assessment rate from 3.3% to 6.4%, and instead recommended that the Legislature address the issue with TUSF funding. The PUC left the assessment alone, and directed providers to limit the funding to lifeline projects, which make up a small percentage of the TUSF (Project 50796). The PUC’s decision precipitated the filing in that project of approximately 20 letters from elected state and county officials, the Texas Association of Rural Schools, and the Texas Border Sheriffs Coalition, all urging the PUC to fully fund the TUSF.

On July 29, 2020, the Texas Tribune published an article entitled: “Analysis: Funding for rural broadband in Texas is in trouble. The pandemic might save it.” In the article, the TUSF is described as a “state fund used to buttress rural telecommunications and internet services.” Emphasizing the need for connectivity to rural areas, the article quoted several of the letters filed with the PUC which extolled the efforts of rural telecommunications providers to bring broadband services to underserved areas.

Chairman Walker referred to this article at the PUC’s open meeting on July 31, 2020; she was obviously concerned with the cited use of the TUSF revenues for the provision of broadband services. (The statutory purpose of the TUSF is to enable all residents of Texas to obtain basic local telecommunications services.) Chairman Walker also noted that she had discussed the TUSF issues with Senator Kelly Hancock. As a result, Chairman Walker had decided that the PUC needs to look into whether companies are using TUSF funds correctly. Chairman Walker then directed PUC Staff to audit the telecommunications companies to ensure that TUSF monies are used correctly, and to determine which companies are actually laying down fiber using these funds. She added that the audit should also help the PUC properly tee-up the TUSF issue to the Texas Legislature. Commissioner D’Andrea mirrored the Chairman’s concerns and added that there has been a misuse of USF funds in other states.

Proceeding separately is the petition for rulemaking filed on July 8, 2020 by the Texas Telephone Association and the Texas Statewide Telephone Cooperative, Inc. (Docket No. 51020), asking the PUC to amend 16 Texas Administrative Code § 26.420 to change the methodology for funding the TUSF. These entities had filed an earlier petition for rulemaking (Docket No. 50818), but withdrew that petition when the PUC asked for comments in Docket No. 50796. This second petition proposes two options to amend the rule: (1) require Voice-over-Internet-Protocols service be included in the assessment for the TUSF; or (2) change the TUSF assessment from a revenue-based assessment to a connection-based assessment. The petition is scheduled for discussion and possible action at the August 27, 2020 Open Meeting. Under
§ 2001.021 of the Texas Government Code, the Commission must either initiate a rulemaking action or deny the petition by September 8, 2020. The August 27, 2020 Open Meeting is the last currently scheduled open meeting before this deadline.

“Agency Highlights” is prepared by Lauren Thomas in the Firm’s Water Practice Group; Sam Ballard in the Firm’s Air and Waste Practice Group; and Patrick Dinnin in the Firm’s Energy and Utility, Compliance and Enforcement, and Water Practice Groups. If you would like additional information or have questions related to these cases or other matters, please contact Lauren at 512.322.5850 or lthomas@lglawfirm.com, Sam at 512.322.5825 or sballard@lglawfirm.com, or Patrick at 512.322.5848 or pdinnin@lglawfirm.com.