Preview of the Regular Session of the 88th Texas Legislature

by Ty Embrey and Madison Huerta

On January 10, 2023, newly elected State Representatives and State Senators from across Texas will travel to Austin and gavel-in to kick off the 88th Texas Legislature. While this has been the practice of our state’s elected leaders since 1846, every legislative session brings new challenges. This year is no different. On the heels of a Regular Session in 2021 defined by the COVID-19 pandemic and Winter Storm Uri, Texans have high expectations for lawmakers as they return for what we all hope will be a more “regular” Regular Session.

The make-up of the Texas Legislature did not change significantly after a general election with few surprises. Republicans have a majority in both the Texas House of Representatives (86–64) and the Texas Senate (19–12) and hold each statewide office. The statewide officers elected to a four-year term in November 2022 are:

• Governor – Greg Abbott
• Lieutenant Governor – Dan Patrick
• Attorney General – Ken Paxton
• Comptroller – Glenn Hegar
• Land Commissioner – Dawn Buckingham
• Agriculture Commissioner – Sid Miller
• Railroad Commissioner – Wayne Christian

With Governor Abbott and Lieutenant Governor Patrick, the complete leadership for the Legislature will be established upon election of the Speaker of the Texas House of Representatives. Incumbent Speaker, Republican Dade Phelan of Beaumont, is running for the Speaker position again and will face at least one challenger in the race for Speaker, Republican State Representative Tony Tinderholt. State Representative Tinderholt has stated he is running to end the traditional practice of Speakers appointing members from both parties to serve as chairpersons of House committees. The Speaker will be elected by Members of the Texas House of Representatives on the first day of session.

Legislative Priorities
While we wait for our newly elected leaders to be sworn in, Governor Abbott and Republican leadership have already expressed their intent to prioritize issues familiar to Texans such as school choice, abortion, and border security. The Legislature will also face the pressing issues of the state of the electric grid in the aftermath of Winter Storm Uri. During the 2021 Regular Session, the Legislature passed Senate Bill 2 and Senate Bill 3 aimed at improving the power grid and restructuring the grid’s overseeing agency – the Electric Reliability Council of Texas or ERCOT. Over the legislative interim period, both House and Senate Committees have received status updates from the Public Utility Commission (“PUC”) and ERCOT. While agency leaders assure lawmakers that the grid is equipped to handle high demand, there is a continued debate as to how much reserve capacity the state should have on hand and who should pay for it. This is part of the broader ongoing discussion of redesigning the Texas electric market.

Another main focus of legislators this Regular Session will be how to spend the state’s budget and unprecedented budget surplus. In total, it is estimated lawmakers will have $149.07 billion in general funds which is higher than the $112.5 billion lawmakers had available to work with during the previous legislative session. This is in addition to the $13.6 billion Texas has in its savings account, known as the Economic Stabilization Fund or “rainy day” fund. In addition to its general funds and the rainy day fund, Comptroller Glenn Hegar has estimated Texas will have an unprecedented $27 billion budget surplus generated from oil and gas production taxes collected by the state, among other sources.

Both Governor Abbott and Lieutenant Governor Patrick have stated the budget surplus should be allocated in some form towards continuing to lower property taxes. Incumbent Speaker Phelan has stated he believes the budget windfall represents an opportunity to significantly upgrade the state’s aging and increasingly inadequate infrastructure. Comptroller Hegar has recommended using the surplus to fund water infrastructure, road infrastructure, and broadband internet connectivity. State agencies struggling with retaining employees, such as the Texas Commission on Environmental Quality (“TCEQ”) and PUC, intend to ask the Legislature to allocate some of this surplus to increase salaries for employees. Regardless of where the surplus is allocated, one thing is certain: the Legislature will have tough decisions to make during the budget process.

Environmental Issues
Over the interim period, committees in both the Texas House of Representatives and Texas Senate held hearings to discuss water, wastewater, and utility issues around Texas. These committees include the Senate Committee on Water, Agriculture, and Rural Affairs and the Senate Committee on Natural Resources and Economic Development, as well as the House Committee on Natural Resources and the House Committee on Environmental Regulation. Each committee heard expert and public testimony on issues related to water utility infrastructure, water supply sources, groundwater management and protection, state and regional flood planning, and polluted well site cleanup, among other water and wastewater issues. During the Regular Session, we can expect the committees to continue these conversations and legislators to file legislation to address these issues. Additionally, the Texas Legislature is focused on how to position Texas to secure federal infrastructure funds to help address outdated and eroding infrastructure.

Texas Sunset Commission Recommendations
This Regular Session is an important session for agencies that regulate environmental and utility matters, such as TCEQ, PUC, and ERCOT. These state agencies are up for review by the Texas Sunset Advisory Commission (the “Commission”). The Commission – made up of five State Senators, five State Representatives, and two members of the public – is tasked with reviewing state agencies and programs and recommending if the state agencies should continue to exist and what improvements should be made to the agencies. Ultimately, the Commission determined TCEQ, PUC, and ERCOT should continue to operate and recommended both amendments to Texas statute and directives for better agency management.

Due to the changing dynamics of the state’s electric grid and industry, the Commission’s recommendations for PUC focus on its operational needs rather than market design. The Commission determined PUC is “woefully under-resourced given its critical responsibilities and work,” and needs additional funding to support its data analytics team and additional engineering expertise. Regarding TCEQ, the Commission made recommendations focused on (1) implementing transparent policies and procedures, (2) monitoring and enforcement, (3) protecting the state’s scarce natural resources, and (4) effectively representing the public interest.

To increase transparency and accessibility, the Commission recommended TCEQ post all permit applications and materials on its website; develop Spanish language versions of its online complaint form; and hold virtual public meetings as needed. The Commission also recommended TCEQ develop a guidance document regarding who is considered an “affected person” and hold a public vote on what is an acceptable level of health-based risk factors to use in developing toxicity factors.

On the monitoring and enforcement front, the Commission recommended increasing administrative penalties for all violations with a current cap of $25,000 to $40,000, updating the compliance history rating formula, and reclassifying recordkeeping violations based on potential risk and severity. The Commission also recommended giving TCEQ authority to suspend facility compliance history ratings under exigent circumstances. Additionally, to allow for alternative ways to address enforcement issues, the Commission recommended TCEQ create a program for qualifying facilities to receive training instead of enforcement actions for minor violations.

Other notable recommendations include requiring entities with temporary or open-ended permits to confirm their operations status annually, evaluating use of advisory committees to provide more public involvement, and modifying the nuisance complaint approach to better use investigative resources.

Lloyd Gosselink at the Legislature
Over 1,500 bills have been filed since bill filing began on Monday, November 14, 2022, setting up the framework for what promises to be a busy legislative session. As bills are filed, Lloyd Gosselink will continue to monitor and track all of the key pieces of legislation. During the Regular Session, Lloyd Gosselink will participate in the legislative process to ensure the interests of our clients are represented at the Texas Legislature.

More than 175 years later, the Regular Session for the Texas Legislature still provides an opportunity for Texans across the state to participate in the lawmaking process. Lloyd Gosselink is proud to be a part of that process.

Ty Embrey is Chair of the Firm’s Governmental Relations Practice Group and a member of the Firm’s Water, Districts, and Air and Waste Practice Groups. Madison Huerta is an Associate in the Firm’s Governmental Relations, Water, and Districts Practice Groups. If you have any questions concerning Legislative tracking and monitoring services or legislative consulting services, please contact Ty at 512.322.5829 or tembrey@lglawfirm.com, or Madison at 512.322.5825 or mhuerta@lglawfirm.com.