Agency Highlights

United States Environmental Protection Agency (“EPA”)

EPA’s Proposed Clean Water Act (“CWA”) Section 401 Water Quality Certification Improvement Rule. On June 9, 2022, EPA published a proposed rule to the CWA Section 401 certification process. The proposed rule would roll back Trump-era changes aimed at narrowing certification decisions but preserve
procedural elements of the Trump-era rule (“2020 Rule”). The proposed rule requires each state certification’s final action to result in waiver of the process, approval, outright rejection, or approval with conditions. Further, state officials would be given broader authority to impose conditions on a project and EPA would lose its ability to deem certification waived if a state’s action is deficient. The proposed rule would also allow states to consider the “activity as a whole” presented by a proposed project, in relation to water quality, thus reversing the 2020 Rule’s approach of considering only the project’s immediate water pollution releases. EPA also proposes to expand certification review to include state waters beyond those that are navigable. The proposed rule would also establish new standards to determine “a reasonable amount of time” for certification, with a default reasonableness period of 60 days and a maximum limit of one year. Additionally, the new rule would allow states to decide when a Section 401 application is complete by establishing state-specific criteria and would require that a permittee have a draft federal permit before the review period officially begins.

EPA Reorganizes Office of Ground Water and Drinking Water. EPA recently reorganized its Office of Ground Water and Drinking Water to create a new division and to rename two existing divisions to better align with its work on drinking water capacity and infrastructure and cybersecurity. The new Drinking Water Capacity and Compliance Assistance Division will focus on water system compliance with existing and new drinking water rules regarding per- and polyfluoroalkyl substances (“PFAS”) and other contaminants. EPA has yet to name a director for this division, but Ron Bergman will serve as deputy director. The Drinking Water Protection Division has been renamed the Drinking Water Infrastructure Development Division and will continue to be led by Anita Thompkins. The Water Security Division has been renamed the Water Infrastructure and Cyber Resilience Division and will continue to be led by David Travers. Lastly, the Standards and Risk Management Division, led by Eric Burneson, remains unchanged. This reorganization comes as EPA begins to distribute funds from the 2021 Bipartisan Infrastructure Law (“BIL”) through the Drinking Water State Revolving Fund (“DWSRF”) and Small and Disadvantaged Emerging Contaminant Grants, which requires an increase in agency staff in order to more efficiently distribute money to state funds.

EPA Launches BIL Pilot Programs. EPA has started a series of pilot programs to distribute water funding from the BIL. The first program is a partnership with the U.S. Department of Agriculture and several states to target communities with insufficient wastewater infrastructure. EPA plans to launch two other programs this year. The second program, called the H2O Community Solutions Pilot Program, will identify 30 communities with technical assistance needs and provide technical assistance to apply for EPA water infrastructure funding. The third program will partner with four states with lead service line replacement programs to prepare their lead service line inventory and build up their replacement program though workforce development.

EPA Publishes Lead Service Line (“LSL”) Inventory Guidance. On August 4, 2022, EPA released its new “Guidance for Developing and Maintaining a Service Line Inventory.” The guidance (1) provides best practices for inventory development and risk communications, (2) contains case studies on developing, reviewing, and communicating about inventories, (3) includes a template for water systems, states, and Tribes to create their own inventory, and (4) highlights the importance of prioritizing inventory development in disadvantaged communities where children live and play. Public water systems are required to prepare and maintain an inventory of service line materials by October 16, 2024. The guidance is available for download here and EPA’s inventory template is available for download on its Ground Water and Drinking Water, Revised Lead and Copper Rule page here. EPA hosted a webinar on August 10, 2022 to provide an overview of the guidance and information on addressing lead with the DWSRF and BIL funds. A recording of the webinar is available here.

EPA Issues Proposed Safer Communities by Chemical Accident Prevention Rule to Revise Its Risk Management Program. On August 18, 2022, the EPA Administrator signed the Safer Communities by Chemical Accident Prevention (“SCCAP”) rule which proposes revisions to the Risk Management Program (“RMP”) to further protect communities from chemical accidents. Among the many changes to RMP, the SCCAP Proposed Rule would emphasize that natural hazards and loss of power are among the hazards that must be addressed in hazard reviews and process hazard analyses, and will require justification in the Risk Management Plan when recommendations are not adopted. The rule will also require a Safer Technologies and Alternative Analysis and practicability of inherently safe technologies and designs considered for certain RMP-regulated processes. SCCAP also requires employee participation in resolving hazard analyses, compliance audit, and incident investigation and findings and empowers employees to participate in safety decisions. Communities would also be notified of accidental releases, and notification data of such releases must be provided to local responders, including notification data of the 10-year frequency for emergency response field exercises unless infeasible. EPA’s RMP Proposed Rule Fact Sheet is available here. The public may comment on the SCCAP Proposed Rule at www.regulations.gov (Docket ID No.: EPA-HQ-OLEM-2022-0174) until October 31, 2022. EPA also held virtual public hearings on the rule on September 26, 27, and 28, 2022.

EPA Creates Technical Cybersecurity Support Plan for Public Water Systems. EPA recently prepared a cybersecurity support plan for public water systems (“PWS”), as required by BIL. The report, entitled “Technical Cybersecurity Support Plan for Public Water Systems,” identifies two categories of PWSs that have an elevated need for cybersecurity support. The first category includes smaller PWSs for which EPA plans to develop a checklist of best practices with guidance on how to implement them and associated training. The second category includes PWSs that have undergone cybersecurity risk assessment that require technical support to address vulnerabilities identified in the assessment. EPA plans to offer technical support beginning in 2023 and will deliver the cybersecurity checklist and guidance when available in 2023 on an ongoing basis.

Updates on PFAS. EPA previously issued interim lifetime health advisory levels (“HALs”) for perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”) set at 0.004 parts per trillion (“ppt”) and 0.02 ppt, respectively—much stricter than the detection level. The agency also set HALs for perfluorobutane sulfonic acid (“PFBS”) at 2,000 ppt and hexafluoropropylene oxide dimer acid and its ammonium salt (“GenX chemicals”) at 10 ppt. The announcement caused concern in the water industry about the undetectable levels, but EPA has instructed PWSs to test utilizing the current detection method at 4 ppt and if PFAS is detected, discuss with the state regulator about further sampling and monitoring to protect human health. While HALs are not enforceable, EPA believes that the interim HALs are necessary to emphasize the risk of PFAS and clarify that the replacement chemical is less toxic. Additionally, EPA intends to finalize a risk assessment for PFOA and PFOS in biosolids in late 2024, which will be the basis for determining whether regulation of PFOA and PFOS in biosolids is appropriate.

New rules designate certain PFAS as CERCLA hazardous substances. In early September, EPA released a proposed rule designating perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”) as hazardous substances under CERCLA. PFOA and PFOS are two of several PFAS chemicals. If finalized as proposed, CERCLA liability for cleanup costs will apply to PFOA and PFOS. The rule also includes a reporting requirement so that any person in charge of a facility or vessel must report a release of 1 pound or more of PFOA or PFOS within a 24-hour period. While some exemptions exist, there is no explicit exemption for landfills or wastewater treatment facilities. However, the proposed rule does not require testing for PFOA or PFOS at these facilities or otherwise provide any indication of whether it will be required. Comments are due October 6, 2022.

EPA pre-publication rule reclassifies Dallas-Fort Worth (“DFW”) and Houston-Galveston-Brazoria (“HGB”) as “severe nonattainment areas” under the 2008 ozone standard. DFW and HGB’s current 2008 8-hour Ozone classification is “serious nonattainment.” Their attainment deadlines passed in the summer of 2021, and EPA has provided a pre-publication rule which will reclassify both areas as “severe nonattainment” areas. Though TCEQ requested a year-long extension of the attainment date for the HGB area, and an exceptional event for DFW, EPA denied the exceptional event designation and proposes to deny the extension request in its pre-publication rule. Environmental justice (“EJ”) factors were a contributing factor for denial of the exceptional event designation, which is the first time EJ factors were considered for this type of determination. With the change from serious to severe nonattainment zones, DFW and HGB areas will have a lower major source threshold for volatile organic compounds (“VOC”) and nitrogen oxides (“NOX”) emissions. The threshold will change from 50 tons per year to 25, and sources higher than 25 will need to obtain a federal operating permit. The change will also require an increase of emission offsets from 1.2 to 1.3. The new attainment date is expected to be no later than July 2027.

EPA conducts flyovers for emissions monitoring. In August 2022, EPA conducted helicopter flyovers of oil and gas operations in the Permian Basin utilizing infrared cameras and other technology. The flyovers were intended to help identify and enforce unauthorized emissions of methane and VOCs. After analyzing the data collected, EPA intends to send out notices of noncompliance.

EPA proposes amendments to the Clean Air Act Risk Management Program. On August 31, 2022, EPA published a proposed rule to amend 40 C.F.R. Part 68 that would restore and enhance several provisions enacted by the Obama Administration but later rescinded by the Trump Administration. The proposed rule includes explicit requirements for companies subject to the Clean Air Act Section 112(r) (the Risk Management Program or “RMP”) to consider external events such as natural hazards, including those caused by climate change, as they review their safety programs, with an emphasis on impacts on environmental justice communities. The rule also proposes to reinstate requirements that owners and operators of RMP facilities
provide specific chemical hazard information to the public upon request and to implement a community notification system generally. Facilities with Program 2 and 3 processes would be required to provide specific employee participation in some decision-making processes. Those facilities would also need to conduct audits using third-party auditors after certain qualifying release events, or when EPA determines that conditions exist that could lead to an accidental release, and to conduct a root cause analysis for each incident investigation and consider near miss incidents. EPA is requesting comments on a definition of near miss. Comments are due October 31, 2022.

United States Pentagon

Pentagon to release PFAS-free replacement specifications for firefighting foam AFFF. For years firefighters in the U.S. military have been putting out fires at their airports with aqueous film-forming foam (“AFFF”), a white chemical foam that contains per-and polyfluoroalkyl (“PFAS”) chemicals. Removal of PFAS from the environment has become a priority for EPA. As a result, the Pentagon will release specifications for a PFAS-free AFFF replacement in January 2023. All new foams the U.S. military buys must meet those specifications by October 2023, and the Defense Department must cease using all PFAS-based foam by October 2024. The change is expected to flow through to civilian firefighter use over time, on a state-by-state basis. However, disposal costs and potential liability may be affected by EPA’s new Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” – also known as Superfund) designation. Read more about this designation in EPA Agency Highlights.

Texas Commission on Environmental Quality (“TCEQ”)

TCEQ Begins Discussion on Draft Guidance on Regionalization. In September 2022, TCEQ published its draft regulatory guidance titled “Evaluating Regionalization for Potential New Wastewater Systems” on its Water Quality Advisory Work Group website. The guidance generally states that regionalization is feasible unless one of three situations apply to a proposed system: (1) there are no other wastewater systems within 3 miles of the proposed system; (2) the proposed system has requested service from neighboring systems and has been denied; or (3) the proposed system can successfully demonstrate that it has a valid basis to be granted an exception to the regionalization policy based on its cost analysis. On September 20, 2022, TCEQ hosted a stakeholder meeting to review and discuss the draft guidance. TCEQ has asked stakeholders to submit any comments on the draft guidance to Outreach@tceq.texas.gov (email titled “Draft Regionalization Guidance Document”) by October 23, 2022.

Electric Reliability Council of Texas (“ERCOT”)

ERCOT’s New Chief Executive Takes the Reins. Starting on October 1, 2022, Pablo Vegas began work in his new position as CEO of ERCOT. Vegas has had a great deal of experience in the utility field, working with IBM, PricewaterhouseCoopers, and Anderson Consulting. More recently, Vegas has served as group president for NiSource Utilities and as president of AEP Texas. Vegas has a Bachelor of Science degree in mechanical engineering from the University of Michigan and attended the Advanced Management Program at Harvard Business School.

Brad Jones, ERCOT’s interim CEO, will assist Vegas as he transitions into this new role. Brad Jones has been serving as ERCOT’s interim CEO after the previous ERCOT CEO, Bill Magness, was fired following the 2021 statewide electricity outages.

Public Utility Commission of Texas (“PUC”)

PUC Proposes to Amend 16 TAC § 25.101. Focusing on amendments made to the Public Utility Regulatory Act (“PURA”) as revised by Senate Bill (“SB”) 1281, PUC has proposed to amend 16 TAC § 25.101. These amendments include:

• Establishing a congestion cost savings test for evaluating economic transmission projects;
• Requiring PUC to consider historical load, forecasted load growth, and additional load seeking interconnection when evaluating the need for additional ERCOT transmission projects;
• Providing exemptions to the certificate of convenience and necessity (“CCN”) requirements for certain transmission projects; and
• Requiring ERCOT to conduct a biennial assessment of the ERCOT power grid’s reliability and resiliency in extreme weather scenarios.

Commissioner Cobos and Commissioner Glofelty both weighed in on the subject matter of the amendments in separate memorandums. Commissioner Cobos pointed out the high priority of establishing a congestion cost savings test as an economic criterion when evaluating transmission projects. Both commissioners also emphasized the importance of establishing a definition for resiliency. These memorandums were discussed
at the August 25, 2022 PUC Open Meeting.

At this August Open Meeting, the most recent proposal for publication was approved and later posted on August 26, 2022 with public comments due on September 22, 2022.

Update on PUC Rulemaking Projects. PUC Staff’s current rulemaking calendar for the remainder of 2022 can be found under Docket No. 52935. As of September 15, 2022, the following projects are being prioritized:

• Project No. 52405 – Review of Certain Water Customer Protection Rules
• Project No. 53820 – Review of Rates Available to Provider of Last Resort (“POLR”) Service
• Project No. 53169 – Review of Transmission Rates for Exports from ERCOT
• Project No. 53401 – Electric Weather Preparedness Standards- Phase II
• Project No. 53404 – Restoration of Electric Service After a Widespread Outage
• Project No. 52796 – Review of Market Entrant Requirements

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

• Project No. 52059 – Review of Commission’s Filing Requirements
• Project No. 52301 – ERCOT Governance and Related Issues
• Project No. 51888 – Critical Load Standards and Processes
• Project No. 53981 – Review of Wholesale Water and Sewer Rate Appeals

Railroad Commission (“RRC”)

RRC Amends the Critical Designation of Natural Gas Infrastructure Rule. On August 30, 2022, RRC published in the Texas Register Proposed Amendments to 16 TAC § 3.65, relating to Critical Designation of Natural Gas Infrastructure. The rule designates certain facilities as critical during weather emergencies and authorizes additional facilities to apply to RRC for a critical designation. Based on the current criteria, RRC received 95,000 critical designation requests in the past year. The excessive number of critical facilities could render the designation superfluous and, during times of grid constraint, counterproductive. Accordingly, RRC initiated the rulemaking to limit the number of critical facilities and clarify the scope of
§ 3.65. Key amendments in the rulemaking include:

• Narrows the definition of an event with “potential to result in firm load shed” to provide operators more certainty as to when an energy emergency is occurring;
• Excludes from the list of critical gas suppliers (1) gas wells producing an average of 250 Mcf (or one thousand cubic feet) of natural gas per day or less and (2) oil leases producing an average of 500 Mcf of natural gas per day or less; and
• Authorizes a facility designated as critical to request an exception under limited circumstances.

The comment period on the proposed amendments closed on October 7, 2022. The Atmos Cities Steering Committee submitted comments on the rulemaking with concerns and recommendations.

RRC Adopts Weatherization Rule. On August 30, 2022, RRC adopted the “Weather Emergency Preparedness Standards” Rule, codified at 16 TAC § 3.66. In 2021, the 87th Texas Legislature passed Senate Bill 3, a sweeping response to Winter Storm Uri that, among other things, instructed RRC to impose mandatory operating procedures on gas supply facilities. The Weather Emergency Preparedness Standards Rule, which requires certain gas supply facilities to weatherize and establishes an administrative enforcement process, is a significant step towards ensuring grid reliability. Key provisions in the rule include:

• Natural gas facilities that are (1) on the electricity supply chain map created under Section 38.023 of the Texas Utilities Code and (2) designated as critical under 16 TAC § 3.65 must comply with RRC weatherization rules;
• Each facility subject to the rule is also subject to routine inspections by the RRC’s Critical Infrastructure Division; and
• Non-compliant natural gas facilities are subject to penalties of up to $1 million.

RRC’s Critical Infrastructure Division will begin inspections on December 1, 2022.

“Agency Highlights” is prepared by Danielle Lam in the Firm’s Water and Districts Practice Groups; Mattie Isturiz in the Firm’s Air and Waste Practice Group; and Samantha Miller and Rick Arnett 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, or Mattie at 512.322.5804 or misturiz@lglawfirm.com, or Samantha at 512.322.5808 or smiller@lglawfirm.com, or Rick at 512.322.5855 or rarnett@lglawfirm.com.