Agency Highlights

United States Environmental Protection Agency (“EPA”)

EPA Reworks Its 1,4-Dioxane Evaluation. In November 2024, EPA released a supplement to its 2020 risk evaluation for 1,4-dioxane. In the 2020 determination, EPA scientists concluded that 1,4-dioxane posed an unreasonable risk to workers who work with the solvent as part of their jobs. However, the supplement determines that the 2025 risk evaluation did not evaluate risks from general population exposures in drinking water or air or the full range of exposure that could result when 1,4-dioxane is produced as a byproduct. Now, EPA has determined that the chemical may also pose a risk to the general public.

The 1,4-dioxane risk evaluation was completed under the Toxic Substances Control Act (“TSCA”) and is now being evaluated for separate inclusion in Safe Drinking Water Act (“SDWA”) rules which could take years to promulgate. Regulators are confident that 1,4-dioxane’s inclusion in TSCA rules will have a positive impact on the chemical being released beyond the “fence line,” but EPA would still like to explore the chemical’s inclusion in SDWA regulations. The SDWA, EPA acknowledges, has a higher burden to show that a chemical should be regulated in public water systems.

EPA Announces Studies Targeting Oil & Gas, Waste Treatment Sector for Effluent Limit Guidelines (“ELGs”) Update. On December 16, 2024, EPA announced studies targeting two sectors for potential revisions to ELGs: oil and gas and centralized waste treatment (“CWT”) facilities. EPA believes that technology-based approach should be taken to determine whether the industries should be subject to new ELGs with regard to per- and polyfluoroalkyl substances (“PFAS”).

In the oil and gas sector, EPA deems the study necessary to determine whether the wide range of proprietary chemicals used in exploration, drilling and production includes regulated PFAS. Wastewater is a byproduct from these activities and is therefore subject to ELGs as the treated wastewater is then discharged to surface waters for use in agriculture or wildlife propagation.

CWT facilities are privately owned wastewater facilities that receive and treat industrial wastewater. EPA determined that based on the presence of PFAS in CWTs, the agency wants to better understand the sources of PFAS and other pollutants in CWT facilities.

Oil and gas ELGs were last revised in 2016 and CWT ELGs were last amended in 2003.

EPA Finalizes 404 Rule Ahead of Presidential Transition. Section 404 of the Clean Water Act (“CWA”) prohibits discharging dredged or fill material into U.S. waters without a permit. While the U.S. Army Corps of Engineers typically oversees this program, CWA Section 404(g) allows states and Tribes to manage it, including permitting, compliance, enforcement, and mitigation. The EPA approves and supervises state and Tribal programs. Currently, Michigan, New Jersey, and Florida administer approved Section 404 programs.

The new rule aims to streamline the ability for the states and Tribes to administer 404 programs. Proponents of the new rule hope that states and Tribes assuming the role of dredge and fill regulator can reduce duplicative programs and permitting requirements. Additionally, within the rule, EPA has identified waters within the scope of assumption therefore clarifying to states and Tribes which waters they would be able to regulate.

The new 404(g) rule went into effect on January 25, 2025.

EPA Releases Draft Risk Assessment (“RA”) for PFAS-related Contamination of Biosolids. On January 14, 2025, EPA, in its final days under Biden-appointed administrator Michael Regan, released its long-awaited draft risk assessment (“RA”) for newly regulated PFOA and PFOS-chemicals in sewage sludge when used as fertilizer for land application (also known as “biosolids”). EPA found that in some areas of land where biosolids have been applied, PFAS levels exceed safety thresholds (1 part per trillion) by orders of magnitude. However, the risk assessment included assertions that the general food supply is not at risk, but that certain populations may be at higher risk based on levels of exposure. For continued disposal of biosolids, the draft RA targets increased controls on wastewater treatment for PFOA and PFOS (even though such wastewater facilities are passive receivers, and not typically the generators of such chemicals) and implementing focused industrial pretreatment of wastewater, especially in industries which have a high incident of use or occurrence of PFAS-related chemicals such as PFAS manufacturers, electro- and chrome-platers, and landfills. Lloyd Gosselink and utilities across the state will be interested to see how the new EPA addresses PFAS broadly, but also in the context of biosolids. Given the change in administration, it is possible that there is no action, or delayed action arising out of the RA.

EPA Adds Certain PFAS to the Toxics Release Inventory (“TRI”). In October 2024, EPA proposed a rule to add 16 individually listed and 15 categories of PFAS representing over 100 individual PFAS to TRI, which requires certain manufacturing and industrial facilities to track and report releases of certain chemicals that may cause a threat to human health and the environment into the environment. Reporting Year 2024 now includes 196 reportable PFAS. This comes shortly after EPA designated PFAS as chemicals of special concern, effectively removing the de minimis exemption and requiring any level of PFAS be reported on more specific reporting forms.

Texas Commission on Environmental Quality (“TCEQ”)

Chairman Jon Niermann Resigns; Gov. Greg Abbott Names Brooke Paup as Chair of TCEQ. On January 8, 2025, Texas Governor Greg Abbott appointed Brooke Paup as Chairwoman of TCEQ. Previously, Chairwoman Paup served on the Texas Water Development Board (“TWDB”) from 2018 until her appointment to the Commission. She has served in various positions in the Texas government for over 19 years. Paup holds a juris doctor from Texas Tech School of Law.

Former Chair of the Commission, Jon Niermann, stepped down as of December 31, 2024, after serving with the Commission since 2015.

TCEQ Executive Director (“ED”) Finds the Counties of Bowie, Dallas, Harris, and Tarrant to be Nonattainment Zones under new PM2.5 Standards. On February 7, 2024, EPA finalized a revised primary annual National Ambient Air Quality Standards (“NAAQS”) for fine particulate matter (PM2.5), lowering the standard from 12.0 to 9.0 micrograms per cubic meter. The rule further required states to submit their nonattainment county designations by February 7, 2025. The TCEQ ED has determined that, under the new standards, the counties of Bowie, Dallas, Harris, and Tarrant fall under nonattainment, with all other counties being classified as either attainment or unclassifiable. The Commissioners continued the matter from the December 18, 2024 Agenda and will now deliberate on the designations at the January 2025 Agenda. Once approved, the Commission must next send its determinations to the governor for final approval and transmittal to EPA. We can expect the designations to be finalized in mid-2025.

Texas Water Development Board (“TWDB”)

L’Oreal Stepney, P.E. Named Chairwoman of TWDB. On January 8, 2025, Texas Governor Greg Abbott elevated current TWDB board member L’Oreal Stepney to the Chair of the TWDB. Stepney has served on the board since January 2023. Prior to joining TWDB, Stepney served as deputy director for TCEQ. She holds a Master of Science in civil engineering from the University of Texas.

TWDB is the Texas agency responsible for water resource management and research, assisting with regional water supply and flood planning, and administering loan and grant programs for water infrastructure projects.

TWDB Funding Cycle Open Now for Water Projects. TWDB is currently accepting applications for the State Water Implementation Fund of Texas (“SWIFT”) funding and project submissions for both the Clean Water State Revolving Fund (“CWSRF”) and the Drinking Water State Revolving Fund (“DWSRF”).

The SWIFT program assists rural water and sewer providers in procuring affordable financial assistance for critical infrastructure projects so long as those projects are recommended water management projects named in the 2022 State Water Plan. Applications are due by 5:00pm on February 3, 2025.

The CWSRF financial assistance programs help communities by providing cost- effective funding for wastewater infrastructure projects whereas the DWSRF does the same, but for drinking water and public water systems. The Funds provide below-market interest rates and principal forgiveness for qualified communities. Submissions for both the CWSRF and DWSRF are due by 5:00pm on March 7, 2025.

TWDB is also accepting project information forms (“PIF”) for its CWSRF and DWSRF Emerging Contaminants (“EC”) and Lead Service Line Replacement (“LSLR”) projects. To be eligible for an EC project the proposal must reduce exposure to PFAS and other emerging contaminants through drinking water or by addressing discharges through wastewater. A PIF for funding under the LSLR program must relate to identification, design, planning and/or replacement of lead service lines in a system otherwise eligible for DWSRF. PIFs for EC and LSLR eligible projects are due by 5:00pm on April 4, 2025.

Public Utility Commission of Texas (“PUC”)

Commissioners Glotfelty and Cobos Leave the PUC. Within a two-week span, two PUC Commissioners, Commissioner Jimmy Glotfelty and Commissioner Lori Cobos, announced their resignations from the PUC, effective December 31, 2024.

Commissioner Glotfelty assumed his role at the PUC in August 2021. During his time with the PUC, Glotfelty spearheaded several regulatory initiatives. He helped establish the Aggregated Distributed Energy Resources Task Force, a committee focused on distribution energy resources, including rooftop solar and residential batteries. Glotfelty also led the Texas Advanced Nuclear Reactor Working Group.

Commissioner Cobos assumed her role at the PUC in June 2021 – one of three Commissioners appointed by Governor Abbott in response to Winter Storm Uri. During her time at the PUC, Cobos led efforts to incentivize, and ultimately develop, transmission in the Rio Grande Valley and Permian Basin regions. Prior to her time with the PUC, Cobos served as the head of the Office of Public Utility Counsel representing residential and small commercial consumers in utility matters.

Governor Abbott now has two PUC Commissioner vacancies to fill. In the meantime, the PUC is down to three Commissioners – Chairman Thomas Gleeson, Commissioner Kathleen Jackson, and Commissioner Courtney Hjaltman.

TNMP and AEP System Resiliency Plan Update. As previously reported, Texas-New Mexico Power Company (“TNMP”) filed its Resiliency Plan on August 28, 2024. TNMP’s Resiliency Plan requests $751.1 million over the next three years. During the contested case, intervening parties and PUC Staff identified several proposed projects and investments that were ineligible for Resiliency Plan recovery or were not the most beneficial to ratepayers at this time. TNMP, intervening parties and PUC Staff ultimately came to an agreement that includes a $57.1 million reduction to TNMP’s proposed Resiliency Plan, and implementation of metrics that will allow intervening parties and PUC Staff to accurately monitor the implementation of TNMP’s Resiliency Plan. This settlement results in a Resiliency Plan that is estimated to cost $649 million over three years and, depending on the recovery period, would increase monthly residential bills by $11.54 per month. The PUC has not approved the settlement and will be considering the settlement at an upcoming Open Meeting. The settlement agreement can be found in Docket No. 56954.

AEP Texas Inc. (“AEP”) filed its Resiliency Plan on September 25, 2024. AEP is the fifth transmission and distribution utility to file a system resiliency plan with the PUC. In its proposed Resiliency Plan, AEP estimates that it will spend $352.1 million over the next three years on five measures that AEP believes will mitigate the resiliency events and related risks identified to affect its system. As proposed, this would impact residential bills by an increase of $1.45 per month. The PUC opened a contested case under PUC Docket No. 57057. Intervening parties, PUC Staff, and AEP have reached a settlement in principle.

CenterPoint Withdraws its Appeal in the Electric Rate Case. CenterPoint Energy Houston Electric, LLC (“CEHE”) filed a rate case with the PUC in March 2024, seeking a $60 million increase to base rates. After Hurricane Beryl made landfall in July, CEHE sought to withdraw its pending rate case. Intervenors in the proceeding opposed the withdrawal, arguing that a utility cannot unilaterally withdraw an application it was required to file and pointing to intervenor testimony filed in the docket supporting a rate decrease.

The State Office of Administrative Hearings Administrative Law Judge denied CEHE’s withdrawal and CEHE appealed that decision to the PUC. The appeal had been under the PUC’s consideration for three months when CEHE withdrew its appeal on November 8, 2024. At the PUC’s open meeting on November 14, 2024, Commissioners instructed parties to work diligently to continue discussions. More information about this case is available on the PUC’s Interchange under Docket No. 56211.

Permian Basin Reliability Plan Update. On July 25, 2024, ERCOT filed its Permian Basin Reliability Plan (“Plan”) Study with the PUC. The PUC ordered the study as required by Public Utility Regulatory Act (“PURA”) § 39.167, which implements House Bill 5066 from the 88th Texas Legislature. The Plan itself is meant to compensate for the forecasted load in the Permian Basin, which is one of the most prolific oil and gas basins in the United States. Transmission and Distribution Service Providers anticipate approximately 24 gigawatts (GW) of load in the region by 2030, as well as another 3 GW of oil-and-gas-related load by 2038, for a total projected demand of 27 GW.

The PUC approved the Plan on October 7, 2024, and established deadlines for ERCOT and Staff. Shortly thereafter, ERCOT filed a report (“ERCOT’s Report”) identifying certain transmission service providers (“TSP”) to own, construct, and operate certain projects associated with the Plan. Staff then filed a memorandum (“Staff’s Memo”) on the procedure for the PUC to make a final determination of, identify, and approve the applicable TSPs responsible for each of the projects. It recommended that the procedures for agreed projects be different than those for projects disputed amongst the TSPs. The Commissioners subsequently approved the procedures laid out in Staff’s Memo.

Pursuant to Staff’s Memo, the applicable TSPs filed responses to ERCOT’s Report indicating whether the TSP disputed ERCOT’s identification of responsibility for the common local projects and import paths. On December 4, 2024, ERCOT filed a joint report regarding the status of agreement on responsibility for ownership, construction, and operation of transmission facilities associated with the common local projects and import paths in ERCOT’s Report.

Thereafter, Staff filed a petition (“Staff’s Petition”) asking for the PUC’s determination of TSP rights to own, construct, and operate all projects identified in ERCOT’s joint report for which no dispute was filed or for which the applicable TSPs have made a joint report indicating that their dispute has been resolved. This petition can be found in Docket No. 57441.

TSPs must submit in that same docket evidence supporting their rights to own, construct, and operate these undisputed projects by February 14, 2025. If a dispute regarding the rights related to a project identified in Staff’s Petition arises during the adjudication of Docket No. 57441, the presiding officer may sever that dispute into a separate docket. TSPs, including the Lower Colorado River Authority Transmission Services Corporation and Lone Star Transmission, LLC, are still currently disputing projects identified in ERCOT’s Report. Those petitions can be found in Docket Nos. 57384 and 57422, respectively.

Wind Energy Transmission Texas, LLC Rate Case. On December 3, 2024, Wind Energy Transmission Texas, LLC (“WETT”) filed an application for authority to change rates and tariffs. WETT’s most recent comprehensive rate case was filed on May 28, 2015. Since that rate case, WETT has placed $340.6 million of transmission investment in service. WETT now seeks approval of a requested revenue requirement of $136,602,978, which is a $15.9 million, or 13.2%, increase over its existing revenues. WETT is also asking for a return on equity of 10.5%, cost of debt of 4.33%, and capital structure of 55% debt and 45% equity, for an overall rate of return of 7.11%.

The Steering Committee of Cities Served by Oncor, along with the Texas Industrial Energy Consumers and Office of Public Utility Counsel, are among the parties that have intervened in this proceeding. You may refer to Docket No. 57299 for any filings related to this matter.

PUC Rulemaking Update. PUC Staff filed the current 2024 rulemaking calendar in Docket No. 56060. Status updates on the Commission’s outstanding rulemakings are below:

• Project No. 53404 – Power Restoration Facilities and Energy Storage Resources for Reliability; Proposal for Publication issued June 8, 2024; additional comments filed on August 2, 2024; Commission Staff filed a proposed rule for adoption and discussion at PUC December 19, 2024 Open Meeting
• Project No. 54224 – Cost Recovery for Service to Distributed Energy Resources (“DERs”); PUC Staff filed questions for stakeholders to respond in September and reply to responses in October
• Project No. 54233 – Technical Requirements and Interconnection Processes for DERs; Commissioner Glotfelty filed memorandum on August 28, 2024
• Project No. 55718 – Reliability Plan for the Permian Basin Under PURA § 39.167; PUC Staff filed recommendations; Commissioners Cobos and Hjaltman filed a memorandum on September 25, 2024; PUC Commissioners approved the Plan on October 7, 2024
• Project No. 55000 – Performance Credit Mechanism (PCM); Comments filed on June 20, 2024; PUC Staff filed recommendations on December 13, 2024

Other rulemaking projects awaiting next steps:

• Project No. 52059 – Review of PUC’s Filing Requirements
• Project No. 56199 – Review of Distribution Cost Recovery Factor
• Project No. 55249 – Regional Transmission Reliability Plans
• Project No. 51888 – Critical Load Standards and Processes
• Project No. 53981 – Review of Wholesale Water and Sewer Rate Appeal
• Docket TBD – Water Financial Assurance

Railroad Commission of Texas (“RRC”)

Christi Craddick Won Reelection. RRC Chair Christi Craddick won reelection for her third term at the RRC. Craddick has served the agency since 2012. The elected officials who sit on the three-member commission serve six-year terms and run in staggered elections. As such, one commissioner is up for reelection every two years.

During her campaign, Craddick’s top issue was the growth of the Texas oil and gas industry during her tenure. She also criticized federal regulations intended to reduce emissions and fight climate change as regulations that would damage the fossil fuel industry.

In winning her reelection, Craddick wrote on the website X, “I am humbled and profoundly thankful to Texas voters for again electing me to the Railroad Commission, one of the most important pillars of Texas’ ongoing economic success and America’s national security.”

Texas Gas Service (“TGS”) Central-Gulf Service Area Rate Case Settlement. On June 3, 2024, TGS filed a rate application with the RRC and original jurisdiction cities seeking to raise rates in its Central-Gulf Service Area. TGS, RRC Staff, and city intervenors reached a settlement last fall and the RRC approved the settlement on November 19.

The approved settlement reduced TGS’ requested increase by $6.5 million, lowered the requested residential customer charges, and resulted in a 9.7% Return on Equity (compared to TGS’ requested 10.25%). This rate change took effect for bills rendered on or after November 27, 2024.

Atmos West Texas Rate Case. On October 25, 2024, Atmos Energy Corp., West Texas Division (Atmos West Texas) filed a rate application with RRC and cities retaining original jurisdiction. Atmos West Texas requests approval of an increase in its revenues of $26.9 million (an increase of $72.27% excluding gas costs). In addition, Atmos West Texas seeks approval of multiple new and revised rate riders, incorporation of its Triangle System into its system-wide cost of service for its West Texas Division, implementation of new depreciation rates, and a prudence determination on its capital investments. Intervening parties and RRC Staff have begun reviewing Atmos West Texas’ application.

Energy Conservation Programs. Investor-owned gas utilities are now offering their residential and commercial customers an Energy Conservation Program (“ECP”) Portfolio comprised of appliance rebate offerings and energy conservation initiatives. Texas Gas Service was the first gas utility to file an ECP Portfolio Application following the approval of 16 Tex. Admin. Code § 7.480. TGS’ ECP Portfolio expands on the offerings in the company’s Energy Efficiency Program, and the company proposed an annual budget for its ECP Portfolio of $2,586,152. TGS initially meant for its ECP Portfolio application to apply to each of its service areas. However, it amended its application to limit the request for approval of an ECP Portfolio to only its Central-Gulf Service Area. TGS’ amended application can be found in Case No. 00018221.

Since TGS initially filed its ECP Portfolio Application on August 19, 2024, CenterPoint Energy Texas Gas and Texas Gas Service, on behalf of its West-North Service Area, have filed ECP Portfolio Applications. Those applications can be found in Case Nos. 00018173 and 00019028, respectively.

“Agency Highlights” is prepared by Toni Rask in the Firm’s Water Practice Group; Mattie Neira in the Firm’s Air and Waste Practice Group; 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 Toni at 512.322.5873 or trask@lglawfirm.com, or Mattie at 512.322.5804 or mneira@lglawfirm.com, or Samantha at 512.322.5808 or smiller@lglawfirm.com.