Agency Highlights

United States Environmental Protection Agency (“EPA”)

EPA’s Proposed Definition for Per- and Polyfluoroalkyl Substances (“PFAS”) in Draft Fifth Contaminant Candidate List (“CCL 5”). EPA’s Science Advisory Board (“SAB”) has raised concerns about the narrow definition of PFAS in the draft CCL 5, which is identical to the definition used in the EPA’s proposed Toxic Substances Control Act reporting requirements. The draft CCL 5 includes 81 individual contaminants and several groups of chemicals such as PFAS, disinfection byproducts, and cyanotoxins. EPA would define PFAS based on a certain chemical structure, but would leave out perfluorooctanoic acid (“PFOA”) and perfluorooctanesulonic acid (“PFOS”) as it has already proposed a drinking water standard for the two better known PFAS. The proposed drinking water rule would be published in fall 2022 and be finalized by fall 2023, but the agency is still considering whether other PFAS should be included in the drinking water rule. Meanwhile, SAB and the American Water Works Association have voiced concerns that the chemical structured-based definition for CCL 5 would exclude PFAS that have been found in drinking water, such as perfluoro-2-methosyacetic acid (“PFMOAA”). The Association of State Drinking Water Administrators recommended that EPA revise the structural definition to match the definitions used by the Organization for Economic Co-operation and Development (“OECD”) and the Interstate Technology Regulatory Council. The National Resources Defense Council has also encouraged EPA to mirror the definition of PFAS used by OECD.

EPA Engages the Public in PFAS Discussions. EPA scheduled virtual public meetings on March 2, 2022 and April 5, 2022 to discuss the development of the proposed PFAS National Primary Drinking Water Regulations (“NPDWR”). The meetings are an opportunity for EPA to share information about the proposed PFAS NPDWR and receive input on environmental justice considerations. EPA accepted written public comments on environmental justice considerations in the public Docket No. EPA-HQ-OW-2022-0114 until April 20, 2022. The agency has also invited public water systems serving less than 10,000 people to participate as Small Entity Representatives for a Small Business Advocacy Review Panel to help develop a PFAS NPDWR. EPA has not yet determined if the proposed NPDWR will have a significant economic impact on a substantial number of small public water systems, but due to the possibility of such effect it is proceeding with a Small Business Advocacy Review Panel. EPA has plans to engage other stakeholder groups in 2022, including the National Drinking Water Advisory Council, state and local government officials, and tribal officials.

Federal Water Infrastructure Funding and Domestic Content Requirements. The Bipartisan Infrastructure Law (“BIL”) provides $50 million to EPA to fund clean water, drinking water, and stormwater infrastructure, 49% of which is eligible for grants or principal forgiveness loans. EPA will prioritize increasing investment in urban and rural disadvantaged communities, replacing lead service lines (“LSLs”), and reducing PFAS and other emerging contaminants. The agency released a memo in March 2020 explaining how these funds would be dispersed through the Clean Water and Drinking Water State Revolving Funds (“SRFs”). The BIL also makes permanent the American iron and steel requirement for the Drinking Water SRF (already a permanent requirement for the Clean Water SRF since 2014). Further, the BIL incorporates parts of the Made in America Act such as expanding the “Buy America” requirements to include non-ferrous metals like copper, plastic, concrete, glass, lumber, and drywall; and new provisions requiring all manufacturing processes used in making the material be completed in the United States to qualify as “American made.” Water and wastewater utilities have previously voiced concerns that critical components for their systems do not have domestic supply chains. However, the BIL authorizes waivers under certain circumstances. The White House Office of Management and Budget is expected to issue guidance on the Made in America requirements soon, then EPA will outline a waiver process.

EPA Proposes Changes to Toxic Release Inventory (“TRI”) Reporting for De Minimis PFAS Releases. In March 2022, EPA announced its plans to propose a rule this summer that would call for stricter PFAS reporting under TRI. The agency recently released its 2020 TRI National Analysis Report, the first to include PFAS data, showing that only 38 facilities reported PFAS waste. EPA’s proposed rule would remove eligibility of the de minimis exception for PFAS which allows facilities that report under TRI to disregard certain minimal concentrations of PFAS in mixtures. EPA stated that this change would also remove the exemption with regard to providing supplier notifications to downstream TRI facilities for PFAS and persistent, bioaccumulative, and toxic chemicals. The agency explained that because PFAS is used at low concentrations in many products, removal of the de minimis exception will result in more complete data for these chemicals.

Status of Waters of the United States (“WOTUS”) Rulemaking. On February 7, 2022, the public comment period closed on the EPA and U.S. Army Corps of Engineers’s (“Corps’s”) proposed rule to define WOTUS. The proposed rule put back into effect the pre-2015 definition of WOTUS, also referred to as the 1986 regulations, updated to reflect considerations of Supreme Court decisions such as Rapanos v. United States. GOP lawmakers and drinking water utilities have asked EPA to hold off on its rulemaking efforts until the Supreme Court issues a decision in Sacket v. EPA in which they are considering whether the Court of Appeals for the 9th Circuit set forth the proper test for determining whether wetlands are “WOTUS.” However, EPA and the Corps have continued their rulemaking efforts and announced on February 24, 2022 ten roundtables to facilitate discussion on the implementation of WOTUS. These roundtables include agriculture, conservation groups, developers, drinking water and wastewater managers, environmental organizations, communities with environmental justice concerns, industry, Tribal nations, and state and local governments. The agencies plan to host these roundtables virtually this spring and summer.

Uncertainty Surrounding EPA’s Lead and Copper Rule Revisions (“LCRR”). On December 16, 2021, EPA’s LCRR went into effect with a compliance deadline of October 16, 2024. The LCRR includes many new requirements, including making an inventory of lead service lines (“LSLs”), developing a plan to replace LSL, developing a tap sampling plan reflecting information about where LSLs are located, changing corrosion control requirements, and adding “find and fix” requirements for locations that exceed 15 micrograms per liter of lead. EPA says it does not expect to propose changes to the LSL inventory requirements or the October 16, 2024 compliance date, but it is considering changes to the LSL replacement plan and tap sampling plan requirements. These changes will be made through the proposed Lead and Copper Rule Improvement (“LCRI”) rulemaking, but EPA has not yet set a date for the proposed rule. The agency aims to complete its LCRI rulemaking before the LCRR compliance deadline so that public water systems can incorporate LCRI changes in their LCRR compliance efforts.

CEQ and EPA Release New Environmental Justice Screening Tools. On February 18, 2022, the White House Council on Environmental Quality (“CEQ”) released an early version of its Climate and Economic Justice Screening Tool (“CEJST”) to highlight disadvantaged communities using an interactive geospatial map in furtherance of the White House’s Justice40 Initiative, which aims to address Environmental Justice issues. In addition, on February 18, EPA released an updated version of its EJScreen environmental justice mapping and screening tool. CEQ and EPA developed these screening tools in direct response to a 2021 Executive Order on Tackling the Climate Crisis at Home and Abroad. Federal agencies will use the CEJST to implement the Justice40 Initiative goal of directing 40 percent of the overall benefits of certain federal investments to disadvantaged communities. EPA will use EJScreen for purposes of compliance and enforcement matters, as well as policy-making. In addition, agencies may use EJScreen to identify the location and density of disadvantaged communities for purposes of permitting under the National Environmental Policy Act (“NEPA”).

EPA Makes Technical Revisions and Clarifications to NESHAP Rule for MSW Landfills. On February 14, 2022, EPA published a final rule to finalize technical revisions and clarifications for the National Emission Standards for Hazardous Air Pollutants (“NESHAP”) for MSW landfills, which EPA proposed in a March 26, 2020 rulemaking. The final rule also amends the New Source Performance Standards for MSW Landfills to clarify and align the timing of compliance for certain requirements involving installation of a gas collection and control system. In addition, the final rule revises the definition of “Administrator” in the MSW Landfills Federal Plan, which was promulgated on May 21, 2021, to clarify who has the authority to implement and enforce the applicable requirements. These technical revisions and clarifications went into effect on February 14.

EPA Proposes to Adopt New ASTM Standard for All Appropriate Inquiries Requirement Under CERCLA. On March 14, 2022, EPA released a proposed and direct final rule to adopt a new standard (E1527-21), issued by the American Society for Testing and Materials (“ASTM”) on November 1, 2021, for All Appropriate Inquiries (“AAI”) required under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). ASTM issued the new standard for conducting Phase I Environmental Site Assessments (“ESAs”). The proposed rule provides the option for prospective purchasers of property to use either the new standard or the existing standard (E1527-13) to comply with the AAI requirement in order to establish a defense to CERCLA liability. Notably, the new standard includes guidance on per- and polyfluoroalkyl substances (“PFAS”) for the first time. EPA is accepting comments until April 13, 2022. If EPA does not receive any adverse comment by that date, then EPA will take no further action on the proposed rule and the direct final rule will become effective on May 13, 2022. However, if EPA receives timely adverse comments, then EPA plans to withdraw the direct final rule and address public comments in a subsequent rulemaking.

EPA Proposes New, More Stringent Emissions Standards for Heavy Duty Vehicles. On March 28, 2022, EPA published a proposed rule aimed at reducing air pollution from highway heavy-duty vehicles and engines, including ozone, particulate matter, and greenhouse gases (“GHGs”). The proposed rule seeks to change the heavy-duty emission control program—including the standards, test procedures, useful life, warranty, and other requirements— to further reduce the air quality impacts of heavy-duty engines across a range of operating conditions and over a longer period of the operational life of heavy-duty engines. In addition, the proposed rule seeks to make targeted updates to the existing heavy-duty GHG Phase 2 program, proposing that further GHG reductions in the model year 2027 timeframe are appropriate considering lead time, costs, and other factors, including market shifts to zero-emission technologies in certain segments of the heavy-duty vehicle sector. The proposed rule also calls for limited amendments to the regulations that implement EPA’s air pollutant emission standards for other sectors (e.g., light-duty vehicles, marine diesel engines, and locomotives). EPA is holding a virtual public hearing on the proposed rule on April 12, 2022. The deadline to submit comments is May 13, 2022.

United States Army Corps of Engineers (“Corps”)

On January 5, 2022, the Corps announced that it will require new and pending dredge-and-fill permits (“404 Permits”) to rely on new approved jurisdictional determinations (“AJDs”) using the current, pre-2015 WOTUS definition. The Corps stated that it will not revisit 404 Permit decisions that rely on AJDs made under the Trump-Era definition, also known as the Navigable Waters Protection Rule (“NWPR”). The agency explained that it is governed by the WOTUS definition in effect at the time it completes an AJD, not by the date of the request for an AJD. Therefore, AJDs completed prior to the U.S. District Court for the District of Arizona’s August 30, 2021 decision vacating the NWPR are safe and will not be reopened until their expiration date. For new and pending permits, the Corps will discuss with applicants whether they would like to receive a new AJD under the pre-2015 WOTUS definition or to proceed in reliance on a preliminary determination or no determination whatsoever.

Texas Commission on Environmental Quality (“TCEQ”)

TCEQ Creates a LCRR Stakeholder Group. Following an informal survey to stakeholders at its January 11, 2022 Drinking Water Advisory Work Group meeting, TCEQ created a new stakeholder group to discuss EPA’s LCRR and help TCEQ develop its own rules. The first LCRR stakeholder meeting will be on April 19, 2022 at 1 p.m. Persons interested in joining can register at https://www.tceq.texas.gov/drinkingwater/dwawg/dwawg-lab-stakeholders-mtg-reg-form.

TCEQ Consolidates Texas Pollutant Discharge Elimination System (“TPDES”) Regulations. On March 30, 2022, TCEQ Commissioners approved the consolidation of TPDES rules in 30 Texas Administrative Code Chapters 308, 314, and 315, which contain adoption by reference of federal regulations, with Chapter 305. The adopted rulemaking will repeal Chapters 308, 314, and 315 and move them within Chapter 305, Subchapter P. However, Chapter 308, Subchapters C and J are simply repealed because they were determined to be obsolete. Lastly, the rulemaking also adopted by reference 40 Code of Federal Regulations Part 125, Subpart N. The new rules will take effect on April 21, 2022.

TCEQ’s IHW Generator and Management Fee Increases in Effect. In the January 2022 edition of The Lone Star Current, we reported on TCEQ’s final rule regarding industrial solid waste and municipal hazardous waste generator and management fee increases, adopted on November 3, 2021. That final rule is now in effect and as of March 1, TCEQ has begun implementing the fee increases on a phased fee schedule. The fee increases involve: (1) increasing the Industrial and Hazardous Waste (“IHW”) generation fee schedule from $0.50 to a maximum of $2.00 per ton for non-hazardous waste generation; and (2) increasing the fee schedule from $2.00 to a maximum of $6.00 per ton for hazardous waste generation. In addition, the Executive Director has the ability to adjust the actual IHW generator fee at or below the new fee schedule amounts.

TCEQ’s Amendments to ISW and MHW Rules to Maintain Equivalency with RCRA Revisions in Effect. In the January 2022 edition of The Lone Star Current, we reported on TCEQ’s final rule amending, repealing, and replacing a number of sections of 30 Texas Administrative Code (“TAC”) Chapter 335, Industrial Solid Waste (“ISW”) and Municipal Hazardous Waste (“MHW”), in order to maintain equivalency with Resource Conservation and Recovery Act (“RCRA”) revisions promulgated by EPA. TCEQ adopted the final rule on January 12, 2022, which went into effect on February 3.

The most notable effective rule changes include:

• Revising the existing hazardous waste generator regulatory program by (1) reorganizing the regulations to improve their usability by the regulated community, and by (2) providing greater flexibility for hazardous waste generators to manage their hazardous waste in a cost-effective and protective manner;
• Revising existing regulations regarding the export and import of hazardous wastes from and into the United States by applying a confidentiality determination such that no person can assert confidential business information claims for documents related to the export, import, and transit of hazardous waste;
• Revising rules to adopt EPA’s methodology for determining the user fees applicable to the electronic and paper manifests to be submitted to the e-Manifest system;
• Revising rules to prohibit disposal of hazardous waste pharmaceuticals into the sewage system and codify the exemption for unused pharmaceuticals that are expected to be legitimately reclaimed from being classified as a solid waste; and
• Adding rules to add hazardous waste aerosol cans to the universal waste program.

Public Utility Commission of Texas (“PUC”)

PUC Creates New Power Outage Alert Rules. Amended by Senate Bill 3, the new power outage alert rules will establish criteria for the content, activation, and termination of regional and statewide power outage alerts. These rules were adopted by the PUC on May 26, 2022.

These rules include recommendations made by the PUC executive director to the Texas Department of Public Safety regarding issuing, updating, or terminating power outage alerts. Additionally, the Electric Reliability Council of Texas (“ERCOT”) must notify the PUC when ERCOT forecasts indicate system-wide generation supply is likely to be insufficient within the next 48 hours, or when ERCOT issues system-wide load shed instructions. Transmission service providers outside of the ERCOT region must notify PUC when it has received system-wide load shed instructions from the applicable reliability coordinator.

The new rules can be found in the Texas Administrative Code, specifically 16 TAC § 25.57.

Oncor Releases Quarterly Earnings Report and Files Statement of Intent to Increase Rates. Oncor has released its quarterly earnings for the three-month period ending March 31, 2022. During this time, Oncor received a net income of $194 million. This increase has been attributed to increases by the company in invested capital, higher customer consumption, and higher customer growth. Additionally, there has been an 8.1% increase in revenues from residential customers and a 5.3% increase in revenues from commercial and industrial customers. With these results from this quarterly period, Oncor has seen a 7% (approximately $26 million) increase from the same quarter last year.

In addition to releasing its quarterly earnings, Oncor filed a statement of intent to increase rates with the PUC and cities retaining original jurisdiction. Oncor is seeking to increase rates by approximately $251 million. The breakdown of this increase is as follows:

• Oncor would see a 4.5% increase in present revenues;
• Residential customers would see an 11.2% increase in rates;
• Residential customers who use about 1,300 kWh per month would see a bill increase of approx. $6.02 per month; and
• There would be a 1.6% increase in rates for street lighting.

The proposed effective date is August 1, 2022, but several cities with original jurisdiction have taken action to suspend the effective date. The Steering Committee of Cities has intervened in the rate case proceeding.

Update on PUC Rulemaking Projects. PUC Staff’s current rulemaking calendar for 2022 can be found under Docket No. 52935. The Commission’s current focus is on implementing the statutes proposed by the 87th Legislature.

As of June 16, 2022, the following rulemaking projects are being prioritized:

• Project No. 53380 – Review of Chapter 28 – Rules Applicable to Cable and Video Service Providers
• Project No. 52059 – Review of Commission’s Filing Requirements
• Project No. 52405 – Review of Certain Water Customer Protection Rules
• Project No. 53401 – Electric Weather Preparedness Standards – Phase II
• Project No. 53493 – Emergency Response Service
• Project No. 53404 – Power Restoration After Widespread Power Outage
• Project No. 53403 – Review of Chapter 25.101

Other rulemaking projects that are being prioritized but do not yet have a determined schedule include:

• Project No. 52301 – ERCOT Governance and Related Issues
• Project No. 51888 – Critical Load Standards and Processes
• Project No. 52796 – Review of Market Entrant Requirements
• Project No. 53169 – Review of Transmission Rates for Exports from ERCOT

Texas Railroad Commission (“RRC”)

RRC Updates Emergency Gas Curtailment Rules. On April 12, 2022, RRC approved amendments to the 1970s-era Emergency Gas Curtailment Rules relating to gas deliveries during events when gas utilities lack sufficient supply to serve all customers. These amendments are made as continuous efforts after Winter Storm Uri to ensure that in emergency events life-saving natural gas for food and heat will continue to flow.

• The amendments focus on the prioritization of delivery during emergency events. These priorities include:
• Human needs customers and local distribution systems which serve human needs customers;
• Electric generation facilities;
• Industrial and commercial users of minimum natural gas required to prevent physical harm and/or ensure critical safety to the plant facilities, to plant personnel, or the public when such protection cannot be achieved through the use of an alternative fuel;
• Small industrials and regular commercial loads that use less than 3 million cubic feet of gas per day; and
• Large industrial and commercial users for fuel or as a raw material where an alternative fuel or raw material can be used and operation and plant production would be curtailed or shut down completely when natural gas is curtailed.

These new amendments are set to take place on September 1, 2022 and can be found in the Texas Administrative Code, 16 TAC § 7.455.

Atmos Energy Releases Quarterly Earnings and Files for Rate Increases under the Rate Review Mechanism. On May 5, 2022, Atmos Energy (“Atmos”) released its quarterly earnings for the three-month period ending on March 31, 2022. These earnings include a consolidated operating income of $385.1 million (a $3.3 million increase from last year), a distribution operating income of $311.3 million (an $8 million increase from last year), and pipeline and storage income of $73.8 million (a $4.7 million decrease from last year). In addition to these earnings, Atmos released that it projects expenditures to range from $2.4 billion to $2.5 billion during the 2022 fiscal year.

Prior to releasing its quarterly earnings, on April 1, 2022, Atmos Energy filed its Rate Review Mechanism to increase monthly residential rates in its Mid-Tex and West Texas divisions. The Rate Review Mechanism is a process employed by Atmos in seeking the interim rate increases. The process was negotiated by the Atmos Steering Committee and allows for some regulatory oversight of utility rate requests.

Under this new filing, Atmos Energy would increase monthly residential rates in the Mid-Tex region by an average of $5.64 million and in the West Texas region by an average of $4.39 million. Atmos is seeking to increase Mid-Tex’s annual revenues by $102.4 million and associates the increase with $924 million in new capital expenditures from January 2021-December 2021. Atmos also seeks to increase West Texas’s annual revenues by $8.7 million and associates the increase with $133 million in new capital expenditures from January 2021-December 2021.

Texas Gas Service Company (“TGS”) Files Fourth Cost of Service Adjustment. TGS has filed its 2022 cost of service adjustments for its Rio Grande Valley service area. A cost of service adjustment reflects the annual changes in a gas utility’s cost of service and the rate base is calculated using operating expenses, return on investment, and Federal Income Tax.

TGS has proposed an increase in rates of approximately $3 million. Due to this, residential customers who use about 11 Ccf of gas per month would see an increase of approximately $2.25 per month on their bill. This proposal should be adopted by cities no later than July 27, 2022.

“Agency Highlights” is prepared by Danielle Lam in the Firm’s Water and Districts Practice Groups; Jeff Reed in the Firm’s Air and Waste Practice Group and Lauren Alexander-Bachelder, a UT School of Law student; and Samantha Miller in the Firm’s Energy and Utility Practice Group. If you would like additional information or have questions related to these agencies or other matters, please contact Danielle at 512.322.5810 or dlam@lglawfirm.com, Jeff at 512.322.5835 or jreed@lglawfirm.com, or Samantha at 512.322.5808 or smiller@lglawfirm.com.