Agency Highlights

United States Environmental Protection Agency (“EPA”)

Final Rule Codifying WOTUS Definition Announced. On December 30, 2022, EPA and U.S. Army Corps of Engineers (“USACE”) announced the final “Revised Definition of ‘Waters of the United States’” rule. The revised Clean Water Act definition of “waters of the United States” (“WOTUS”) will go into effect 60 days after it is published in the Federal Register. The revised definition aligns with past policies that have become known as the “1986 regulations,” when the last major update to CWA jurisdiction occurred, and includes updates accounting for recent Supreme Court decisions. It is the goal of EPA and USACE that the new definition eliminate the confusion left by the Obama and Trump Administrations’ changes to WOTUS and avoid continuing litigation from previous rules and appeals. The revised definition accounts for recent Supreme Court cases by codifying those decisions into law, including the Rapanos plurality that resulted in two separate jurisdictional standards—Justice Scalia’s narrow “relatively permanent and continuous surface connection” test and Justice Kennedy’s broader “significant nexus” standard. In the final rule, one of the two standards must be met for a waterbody to be considered a “water of the United States.” The rule also takes into consideration the best available science and public comments received to establish a definition supportive of public health, environmental protection, agriculture, and economic growth. EPA and USACE have chosen to move forward with the revised definition despite calls for a hold on the new WOTUS rule until the ongoing Sackett v. EPA case contemplating jurisdictional standards for wetlands is decided. The Pre-Publication Final Rule Notice of the revised definition is available at: https://www.epa.gov/wotus/revising-definition-waters-united-states.

PFAS Effluent Limits in State NPDES Permits. House lawmakers have urged EPA to place strong per- and polyfluoroalkyl substances (“PFAS”) safeguards in upcoming guidance to states that would reduce PFAS in wastewater discharge permits and push for the requirement of technology-based effluent limits on a case-by-case basis in the permits. In an October 11, 2022 letter to the EPA Administrator, lawmakers cited the difficulty in removing PFAS contamination once it is in the environment, evidence of PFAS-related health risks, and extremely long persistence as the basis for requiring limits. The upcoming guidance, once issued to state permitting authorities, would apply to 47 states with the authority to issue Clean Water Act National Pollutant Discharge Elimination System (“NPDES”) permits, having greater applicability than guidance issued in April 2022 that only applied to the three states where EPA is the permitting authority—Massachusetts, New Hampshire, and New Mexico. The safeguards proposed by the lawmakers include: (1) obligating suspected or known sources of PFAS to disclose PFAS pollution as part of their existing NPDES permit; (2) requiring the incorporation of technology-based effluent limits on a case-by-case basis in NPDES permits for PFAS dischargers; and (3) requiring water works to evaluate PFAS introductions to their systems and ensure industrial users are pretreating. Released on December 5, 2022, the new guidance recommends that states use the most current methods for sampling and analysis in their NPDES programs to identify known or suspected sources of PFAS as well as to implement technology-based limits on PFAS discharges. Some states, such as Michigan, have already begun to use their state administered NPDES permits to reduce sources of PFAS before entering surface waters.

EPA proposes a new hydrofluorocarbons (“HFCs”) rule. EPA published a proposed rule on November 3, 2022 that would continue EPA’s implementation of the American Innovation and Manufacturing Act’s provisions to phase down HFCs by: (1) determining the process for allocating HFC production and allowances for 2024 through 2028; (2) amending the consumption baseline; (3) codifying how allowances must be expended for import of regulated substances; and (4) imposing obligations related to import notifications and recordkeeping. The proposed rule affects industries that produce, import, export, destroy, use as feedstock or process agent, reclaim, or recycle HFCs. The proposed rule specifically lists approximately 30 non-exhaustive industries by North American Industry Classification Systems that may be affected. The comment period closed on December 19, 2022.

Deadlines Announced for the Lead and Copper Rule. The upcoming lead and copper rule rewrite is expected to be proposed by EPA by the end of 2023 with final action by the end of 2024. The Lead and Copper Rule Improvements is intended to strengthen the Trump-era Lead and Copper Rule Revision. These deadlines, included in EPA’s Final Strategy to Reduce Lead Exposure and Disparities in U.S. Communities, was the first time EPA has offered deadlines for the agency to complete actions on pending lead policy. The release, posted on October 27, 2022, laid out a government-wide approach for curbing an array of lead exposures, and included plans to complete the current review of the lead national ambient air quality standard in 2026 and complete several other source-specific lead rules in the next two years, including secondary lead smelters, lead acid battery manufacturing, primary copper smelters, and large municipal waste combustors.

EPA issues a final rule reclassifying Dallas-Fort Worth (“DFW”) and Houston-Galveston-Brazoria (“HGB”) as “severe nonattainment areas” under the 2008 ozone standard. Effective November 7, 2022, DFW’s and HGB’s 2008 8-hour ozone classification was reclassified from “serious nonattainment” to “severe nonattainment.” Due to this reclassification, the major source threshold for volatile organic compounds and nitrogen oxide emissions changed from 50 tons per year (“tpy”) to 25 tpy and emissions offsets must be increased from 1.2 to 1.3. Any sources over 25 tpy must obtain a FOP. Additionally, the Clean Air Act will prohibit the sale of conventional gasoline and require that federal reformulated gasoline be sold in these areas beginning November 7, 2023. The new attainment date is July 20, 2027.

EPA issues an amendment to the National Emission Standards for Hazardous Pollutants (“NESHAP”) rule. The amendment removes exemptions from the rule for site remediation activities performed under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) as remedial action or a non-time-critical removal actions and as corrective actions at treatment, storage, and disposal facilities under the Resource Conservation and Recovery Act (“RCRA”). The previous exemptions were determined based on EPA’s conclusion that the requirements under CERCLA and RCRA were “functionally equivalent” to the NESHAP requirements. However, EPA did not determine whether the CERCLA and RCRA rules were at least as stringent as the NESHAP rules. After ongoing court proceedings and EPA’s reconsideration of these exemptions, EPA proposed to remove these exemptions entirely. The rule was effective beginning December 22, 2022 and the compliance date for existing sources is 18 months after the effective date.

EPA’s Wastewater Lagoons Action Plan. The first-ever Lagoon Wastewater Treatment Action Plan (the “Plan”) has been released by EPA, announcing nearly $2 million in research grants to accelerate innovation in alternative wastewater treatment technologies for lagoon and pond systems of small communities. The resources provided by the Plan will help improve public health and waterway protections for rural and Tribal communities. The Plan outlines critical actions that EPA will implement through 2026 to assist these communities with wastewater treatment systems by providing financial and technical assistance tools, including those to help underserved communities with access to the Biden administration’s Bipartisan Infrastructure Law funding. Michigan Technological University, in Houghton, Michigan, and West Virginia University, in Morgantown, West Virginia, will each be receiving a funding award. Their research will focus on a floating treatment wetland system in a lagoon and technology options to remove nutrients from lagoon systems in conjunction with a decision support tool to determine the cost-effectiveness of such technologies, respectively. The Plan is available at: https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=P1015XQR.txt.

Texas Commission on Environmental Quality (“TCEQ”)

New Interim TCEQ Executive Director. On December 14, 2022, it was announced that Toby Baker would be leaving his position at TCEQ to join the Governor’s Office as deputy chief of staff. On December 15, 2022, Erin Chancellor began serving as Interim Executive Director. Chancellor previously served as TCEQ’s Director of the Office of Legal Services.

2024 MS4 General Permit Renewal. TCEQ is in the process of renewing the TPDES Phase II Municipal Separate Storm Sewer System (“MS4”) General Permit TX040000. The current general permit, which took effect in 2019, is set to expire in 2024, and TCEQ is planning to make updates to the permit and application process. A stakeholder meeting was held in September to discuss the plans and process of renewal and to receive oral public comments. The biggest proposed change to the 2024 general permit will be the replacement of the current two-step general permit with a comprehensive general permit that streamlines the current application process. Stormwater Management Programs (“SWMP”), although still required by the permit, will no longer need to be submitted for technical review, which will also serve to eliminate the need for public notices and public comment periods. The comprehensive general permit will also incorporate an electronic application and annual reporting system to further streamline the process. A recording of the stakeholder meeting can be viewed at: https://www.youtube.com/watch?v=4gWZb0eHVoU.

Texas Nonpoint Source Management Program Approved by EPA. The 2022 Texas Nonpoint Source Management Program, developed jointly by TCEQ and the Texas State Soil and Water Conservation Board, has been approved. The most recent revision of the program was adopted by TCEQ Commissioners on December 15, 2021, and subsequently approved by EPA on August 29, 2022, after being submitted by the Texas Governor’s Office. The program, first developed in 2008, is the state’s comprehensive strategy for addressing nonpoint source pollution. The 2022 revision aims to incorporate EPA’s eight components of an effective program, establish long and short-term goals for the program, provide coordination of nonpoint source related programs, and prioritizes assessment, planning, and implementation activities in priority watersheds and aquifers. The plan is available for download at: https://www.tceq.texas.gov/downloads/water-quality/nonpoint/plans-reports/2022-nps-management_program_sfr-68.pdf.

TCEQ Air Permits Division adds Title V Federal Operating Permit (“FOP”) project submission capabilities to the State of Texas Environmental Electronic Reporting System (“STEERS”). All FOP applications submitted as of January 1, 2023 must be submitted through STEERS. The Responsible Official or Duly Authorized Representative should submit and certify the project without submitting a separate OP-CR01 certification form.

TCEQ issues guidance to provide a directory of commercial management facilities. The guidance document was drafted in response to TCEQ updating its list of Commercial Management Facilities for Hazardous and Nonhazardous Industrial Solid Waste in October 2022. The guidance provides a directory of those facilities by TCEQ Region and consists of facility contact information, type of facility, and waste types accepted. The guidance is particularly beneficial to waste generators, who are responsible for determining which facility to utilize. The guidance shows that the Lubbock, El Paso, San Angelo, Austin, and Laredo Regions do not have any Industrial and Hazardous Waste (“IHW”) management facilities, and generators in those areas will need to look to other regions. Though separate resources, TCEQ also launched an IHW Facility Viewer on its Geographic Data Viewer page which may be helpful to the same industries utilizing the guidance.

TCEQ requires a new Public Involvement Plan (“PIP”) Form. A PIP form must be completed for applications for certain air, waste, and water permits and registrations filed after November 1, 2022 and must include data from EPA’s Environmental Justice tool if two triggers are met. The first trigger is if the applicant is applying for a specific type of facility or action, including a new industrial hazardous or industrial solid waste permit, or adding class 1 waste to a waste stream, as well as other actions specified by TCEQ. The second trigger is if all of the following three are true: (1) public notice is required; (2) either the activity proposed typically has significant public interest when located in the proposed area or past permitting actions for the location received significant public interest; and (3) the proposed facility is located in the Austin / Round Rock / Georgetown Municipal Statistical Area (“MSA”), San Antonio / New Braunfels / Pearsall MSA, Dallas / Fort Worth MSA, Midland / Odessa / San Angelo MSA, Amarillo / Pampa / Borger MSA, Houston / Woodlands MSA, any county located along the Texas / Mexico border, or any other area designated by TCEQ.

TCEQ proposes amendments to 30 Texas Administrative Code (“TAC”) Chapter 113, Subchapter D, Division 1 to update emissions guidelines for existing municipal solid waste (“MSW”) landfills. In 2016, EPA issued new emissions guidelines in its federal plan for MSW landfills. In states without an approved state plan, the federal plan must be followed and administered by EPA. The proposed changes to 30 TAC Chapter 113 would update Texas’s state plan in compliance with EPA’s 2016 amendments so that MSW landfills in Texas may follow the state plan and be subject to TCEQ’s jurisdiction rather than EPA’s. The amendments would mimic EPA rules with two exceptions; TCEQ proposes to include an alternate applicability date to EPA’s standard applicability date and to include a requirement for landfills subject to 30 TAC Chapter 115, Control of Air Pollution from Volatile Organic Compounds, to provide an annual report on non-methane organic compound emissions. An alternate applicability date was utilized in the previously compliant state plan and was approved by EPA at that time. The proposed rule will be considered by the TCEQ Commissioners at the January 11, 2023 TCEQ Agenda. The comment period is proposed to be from January 27, 2023 to February 28, 2023, if the TCEQ Commissioners approve the proposed rule for publication.

Electric Reliability Council of Texas (“ERCOT”)

ERCOT Appoints VP of Public Affairs. On November 7, 2022, Robert Black assumed his role as ERCOT’s Vice President (“VP”) of Public Affairs. As the VP of Public Affairs, Mr. Black is responsible for ERCOT’s government affairs, customer support, and external communications. Prior to joining ERCOT, Mr. Black served as VP of External Affairs at AEP Texas, as a senior media advisor for Governor Greg Abbott’s 2014 campaign, and as Governor Rick Perry’s Press Secretary and Communications Director.

ERCOT Bylaw Change. ERCOT has recently approved changes to its bylaws to eliminate the right of corporate members to vote on future proposed amendments while preserving the rights of corporate members to comment on any such proposal and to propose amendments themselves. The corporate members or stakeholders are made up of buyers and sellers of electricity and have invested large amounts of capital in the ERCOT market. These corporate members are therefore subject to legitimate risks of loss of capital. Consequently, losing the ability to vote on future proposed amendments is of great concern to these members. Comments on the proposed changes were filed, many of which opposed the elimination of the corporate members’ right to vote. However, the modifications ERCOT made in response to comments did not reflect the concern regarding corporate members’ right to vote.

On November 8, 2022, the ERCOT Board requested PUC’s input. Chairman Lake filed a memo in agreement with the modified bylaws, stating that the legislature delegated governance authority to the Board to revise its bylaws. All Commissioners were in support of Chairman Lake’s memo. The Board adopted the modified bylaws at its December 20, 2022 meeting.

Public Utility Commission of Texas (“PUC”)

ADER Pilot Project Governing Document Approved. PUC recently established the Aggregated Distributed Energy Resource (“ADER”) Task Force to assist ERCOT’s development of the ADER Pilot Project. ERCOT defines an ADER as a “resource consisting of multiple premises connected at the distribution system level that has the ability in aggregate to respond to ERCOT dispatch instructions.” On November 3, 2022, PUC adopted ADER’s governing document to serve as a framework for the first phase of the Pilot Project.

According to the governing document, the Pilot Project will assess manners in which ADERs can promote reliability, incentivize investment, support better load management during emergencies, and reduce transmission and distribution investments. ERCOT will still be involved by conducting studies to analyze different ADER dispatch and pricing schemes and evaluate an ADER’s ability to provide primary frequency response and ancillary services.

Amendments made to 16 Texas Administrative Code (“TAC”) § 25.101. As previously discussed in The Lone Star Current published in October 2022, the Commission had filed a proposal for publication of amendments to 16 TAC § 25.101. Comments were soon filed and considered, and at the PUC Open Meeting on November 30, 2022, the Commission approved the amendments. The amendments include:

• establishment of a congestion cost savings test for evaluating economic transmission projects;
• requiring the Commission to consider historical load, forecasted load growth, and additional load seeking interconnection when evaluating the need for additional ERCOT reliability transmission projects;
• providing exemptions to the certificate of convenience and necessity 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.

An order adopting the amendments was filed on December 7, 2022. You can find further information on the PUC Interchange under Docket Number 53403.

Water Customer Protection Rules Reviewed, PUC’s Review Soon to Follow. On October 20, 2022, an order was filed adopting 16 TAC § 24.173 and 16 TAC § 24.364, each of which relate to late fees and disconnections for water customers during an extreme weather emergency. Specifically, these rules will prohibit disconnections and late fees for nonpayment during an extreme weather emergency, require retail public utilities to offer payment schedules for bills due during an extreme weather emergency, and adopt a civil penalty classification system for use by courts. These rules were created to implement requirements of Senate Bill 3 which was passed in response to Winter Storm Uri.

PUC Undergoes Review by Sunset Advisory Committee. In 2013, PUC was given the authority over water and wastewater bills and fees regulations. Consequently, PUC has become underfunded and understaffed because the agency spends a disproportionate amount of its time on water and wastewater regulation compared to the funding it receives. PUC estimates it spends approximately 60 percent of its time on average on water and wastewater regulation.

The Sunset Advisory Commission has considered the issues pertaining to PUC funding, which could lead to the ability to hire more staff, as well as improving its data management and analysis, regulatory rules and processes, and guidance to these utilities. On January 11, 2023, the Commission will vote on final recommendations which will then go to Texas Legislature to form the basis of legislation.

Update on PUC Rulemaking Projects. As of the end of 2022, only a few items remain on the PUC Staff’s 2022 rulemaking calendar. However, the 2023 rulemaking calendar is in early stages and can be found under Docket No. 54455. As of December 9, 2022, one project, review of market entrant requirements (Docket No. 52796), will be proposed for adoption in 2023.

Texas Railroad Commission (“RRC”)

RRC Amends Gas Facilities Rules. Last year, as part of the implementation of Senate Bill 3 and House Bill 3648 from the Legislature, RRC proposed 16 TAC §3.65. The rule specifies how agencies designate certain gas facilities as “critical” which is particularly important when it comes to the power grid because natural gas suppliers fuel many electric generators, and failures by the gas industry were identified as a major contributing factor behind rolling outages in 2021. Although originally created in 2021, the rule has been updated and these changes took effect on November 21, 2022. The changes include:

• further clarification of the process that gas facilities must follow when requesting critical designations;
• further clarification of how the agency makes such designations;
• adopted amendments to provide more certainty regarding the definition of “energy emergency”; more specifically, the Commission adopted amendments to define an event with “potential to result in firm load shed” as when the reliability coordinator of a power region in Texas issues an Emergency Alert Level 1 or 2;
• adopted amendments to the list of critical gas suppliers to exclude gas wells producing an average of 250 Mcf of natural gas per day or less and oil leases producing an average of 500 Mcf of natural gas per day or less; and
• adopted amendments clarifying that certain facilities may request an exception unless the facility is included on the electricity supply chain map.

Lawmakers and RRC Oppose the Gas Desk Proposal. Brad Jones, the then-interim director of ERCOT, proposed the idea that ERCOT would monitor the natural gas sector in real time through the gas desk. The purpose of the gas desk would be to identify grid choke points where a gas supply distribution could knock out power generation. The gas desk proposal was discussed at the September 13, 2022 joint legislative hearing consisting of the House State Affairs and Energy Resources Committees, where it received significant pushback. RRC commissioner Christi Craddick, various lawmakers, and gas industry representatives opposed the proposal.

“Agency Highlights” is prepared by Chloe Daniels 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 Chloe at 512.322.5814 or chloe.daniels@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.