Agency Highlights

United State Environmental Protection Agency (“EPA”)

EPA Plans to Review Air Quality Standards for Lead. On March 12, 2020, EPA announced that it plans to initiate a review of the air quality standards for lead. This review will be conducted to determine if the current lead standards protect public health or need to be tightened.

EPA sets national ambient air quality standards (“NAAQS”) for pollutants that endanger the public health or the environment. Lead is one of the six criteria pollutants for which EPA sets NAAQS. In October 2016, EPA retained the lead standards set in 2008 following a review of the NAAQS. EPA retained both the primary and secondary standards at .015 micrograms of total suspended lead particles in a cubic meter of air. Sources of lead such as waste incinerators, utilities, lead-acid battery manufactures, lead smelters, and ore and metal processors may be impacted by stricter lead standards.

EPA Finds Texas Failed to Submit State Plan for Landfill Emission Guidelines. On February 29, 2020, EPA found that Texas, along with 41 other states, had failed to submit a state plan for the 2016 Emission Guidelines and Compliance Times for Municipal Solid Waste Landfills.

EPA required states to submit plans for review and approval by August 29, 2019. The regulations in the Emission Guidelines establish a deadline of two years for EPA to promulgate a federal plan for states that have failed to submit a state plan. EPA announced that it is now beginning work on the federal plan; however, states may still have an opportunity to submit a plan before the federal plan is promulgated. Furthermore, EPA announced that its finding does not impose sanctions and it is committed to working with states to expedite the missing submissions and to review and act on their state plan submissions.

In response, the Texas Commission on Environmental Quality (“TCEQ”) has announced plans for a future rulemaking to revise 30 Texas Administrative Code, Chapter 113, Subchapter D to incorporate a new state plan in compliance with the Federal Clean Air Act and 2016 Emission Guidelines. The future rulemaking would revise Subchapter D to remove outdated references to prior Emission Guidelines and add references to the provisions of the 2016 Emission Guidelines under 40 C.F.R. Part 60. TCEQ anticipates proposing the rulemaking in September 2020 with a comment period to end on November 16, 2020. TCEQ announced plans for a separate, concurrent, rulemaking to replace the existing standard air permit for MSW Landfills with a non-rule standard permit that would be issued to reflect the changes in the federal regulations.

EPA Offers Additional $5 Million to Recipients of Brownfields Loan Fund Agreements. On March 6, 2020, EPA announced that it is offering an additional $5,000,000 to recipients of its Brownfields Revolving Loan agreements. The Small Business Liability Relief and Brownfields Revitalization Act authorizes EPA to make additional funds available. The agency will accept requests for the funding from parties with existing revolving loan fund agreements. This funding may contribute to the redevelopment of underused properties that may be contaminated.

EPA Releases Proposed 2020 Multi-Sector General Permit. On March 2, 2020, EPA released its 2020 National Pollutant Discharge Elimination System (“NPDES”) Multi-Sector General Permit (“MSGP”) for public comment. The MSGP permit authorizes storm-water discharges associated with various industrial activities.

The revisions include changes to signage of permit coverage, requirements for operators to consider major storm control measure enhancements, changes to eligibility for stormwater discharges at federal CERCLA sites, revisions to sector-specific fact sheets, and changes to monitoring requirements. Monitoring requirements would include a universal benchmark requirement for pH, total suspended solids, and chemical oxygen demand that would apply to all facilities subject to the MSGP. The final MSGP permit will take effect on June 4, 2020, when the current MSGP expires. Public comments on the proposed MSGP are due May 1, 2020.

TCEQ also has announced plans to renew its state MSGP before it expires on August 14, 2021, but has not yet released the revised plan.

EPA Launched New Web Portal Containing All Guidance Documents. On February 28, 2020, EPA launched a new web portal listing all of its guidance documents. EPA took this action pursuant to an executive order in October 2019 requiring agencies to post all of their guidance on one easily accessible website. The order defines guidance documents as the tools that agency officials use to interpret regulations under their jurisdiction, including letters, adjudication decisions, press releases, and technical memoranda. Violation notices, advisory or legal opinions, and agency correspondence with individual persons or entities are exempted from the requirements of the order.

EPA Agrees to Conduct Rulemaking for Potential Spills of Hazardous Substances. On February 3, 2020, EPA published a consent decree in which it agreed to issue, within two years of the consent decree, a proposed rulemaking on the planning required for potential hazardous waste discharges (similar to the existing Spill Prevention, Countermeasure and Control (SPCC) program for oil). According to the consent decree, a final rule would be required within 30 months of the proposed rulemaking.

EPA Updates Petition Process to Object to Title V Air Permits. On February 5, 2020, EPA issued a final rule updating the process for petitioning the agency to object to state-issued Clean Air Act Tile V air permits. The rule describes the information needed in a petition for the EPA to review a claim of substantive or procedural permit shortcomings. The rule also requires delegated state permitting authorities, such as TCEQ, to respond in writing to “significant” comments and describe the basis for the permit terms and conditions. The effective date of the final rule is April 6, 2020.

EPA issues Draft Guidance to Increase Use of Plantwide Permitting. On February 13, 2020, EPA issued draft guidance clarifying the conditions used to adjust “plantwide applicability limits” (“PALs”). PALs are intended to afford large sites the flexibility to better manage compliance with emissions caps when making upgrades and plant changes. However, few PAL permits have been issued. The new guidance is intended to increase industry use of PALs, which EPA considers a more flexible approach to permitting.

Executive Office of the President Council on Environmental Quality (“CEQ”)

CEQ Issues a Proposed Rulemaking to Update Procedural Provisions of the National Environmental Policy Act (“NEPA”). On January 10, 2020, the CEQ published a Notice of Proposed Rulemaking (“NPRM”) to “modernize and clarify” NEPA’s procedural provisions for “more efficient, effective, and timely NEPA reviews.” In this NPRM, the CEQ proposes changes to the scope, depth, and length of the NEPA review process.

Several of the CEQ’s proposed changes affect the scope of NEPA. The CEQ proposes restraints on the previously broad interpretation of what constitutes a “major federal action” triggering NEPA review. The NPRM clarifies that “major” projects do not include “non-discretionary decisions,” federal projects with minimal Federal funding, or federal projects with minimal Federal “control and responsibility.” Under the proposed changes, any federal projects that are not “major,” even if they have “significant” environmental impacts, would not be subject to NEPA review.

The CEQ’s proposed changes affect the depth of a NEPA review by altering several key definitions, including the definition of “effects” and the definition of “reasonable alternative.” Currently, NEPA requires agencies involved in a project to consider three types of environmental effects: direct, indirect, and cumulative. The CEQ proposes to simplify the definition of “effects” by removing the “direct, indirect, and cumulative” language. Additionally, the CEQ proposes to revise the definition of “reasonable alternative” to include “ranges of alternatives that are technically and economically feasible.”

The proposed rulemaking suggests changes to limit the length of the NEPA review process. The NPRM proposes presumptive time limits of two years for completion of environmental impact statements (“EISs”) and one year for completion of environmental assessments (“EAs”) unless a senior agency official modifies the time limit due to certain factors such as the “potential for environmental harm.”

The comment period for this proposed rulemaking closed on March 10, 2020. For more information about the proposed NEPA revisions, visit: https://www.govinfo.gov/content/pkg/FR-2020-01-10/pdf/2019-28106.pdf.

Texas Commission on Environmental Quality (“TCEQ”)

TCEQ’s Pending Rule Proposal Requires Customer Notifications when Public Water Systems Stop Adding Fluoride. TCEQ Commissioners plan to vote on a pending rule proposal that will require public water systems to provide written notification to customers at least 60 days before terminating fluoride additions in the water system. The reasoning behind the rulemaking stems from House Bill 3552, passed in 2019 by the 86th Texas Legislature, which amended the Texas Health and Safety Code to require public water systems to notify their customers prior to permanently terminating the addition of fluoride to drinking water. The rulemaking would amend sections 290.39 and 290.122 of the Texas Administrative Code. For more information on the pending rule proposal, visit: https://www.tceq.texas.gov/assets/public/legal/rules/rule_lib/proposals/20007290_pro.pdf

Morgan Johnson Joins the TCEQ as the Senior Advisor to Commissioner Emily Lindley. In January 2020 Morgan Johnson took on the role of Special Counsel at the TCEQ. Johnson previously worked as an attorney at McGinnis Lochridge in Austin, Texas, and will now serve as Senior Advisor to TCEQ Commissioner Emily Lindley. Johnson has a background in transactional, legislative, and administrative law, with a focus on water resources, real estate, and regulatory compliance issues.

TCEQ Proposes Updates to Application Processing. On March 6, 2020, TCEQ announced plans for a proposed rulemaking to amend 30 Texas Administrative Code § 281.18 to “modernize communications” between TCEQ and applicants by specifically providing an option for the use of electronic mail for communicating application deficiencies and receiving responses from applicants, rather than communication via letter and mailed notices. TCEQ claims that this update will reduce TCEQ postage costs and improve the efficiency of application processing. The anticipated comment period is April 10-May 11, 2020.

TCEQ Updates Sludge Rule. On March 6, 2020, TCEQ adopted a final rule to amend sections of 30 Texas Administrative Code, Chapter 312, concerning Sludge Use, Disposal, and Transportation. This rulemaking was adopted to clarify the purpose of rule requirements, remove inconsistencies in the rules, and improve the clarity of Chapter 312.

Specifically, the rulemaking clarifies: when wastewater treatment plants are authorized to apply domestic sewage sludge mixed with processed or unprocessed grit trap or grease trap waste to the land; the requisite buffer zones; and the conditions for authorization under 30 Texas Administrative Code, Chapter 330 or 332 for processing of sewage sludge or domestic septage. The rulemaking also adds metal limits, management practices, monitoring requirements, and recordkeeping and reporting requirements for water treatment sludge in order to be consistent with federal requirements.

MSW General Operating Permit Revisions. TCEQ recently issued a renewal and revision to the Municipal Solid Waste (“MSW”) Landfill General Operating Permit (GOP) No. 517, which covers air emissions at MSW facilities, effective February 24, 2020.

The GOP contains revisions based on recent federal and state rule changes, which include updates to the requirements tables; the addition of new requirements tables; updates to the terms; and updates to the compliance assurance monitoring and periodic monitoring. The renewal also corrects typographical errors and updates language for administrative preferences.

Current permit holders are required to submit an application for a new authorization to operate (“ATO”) no later than May 24, 2020, if any of the emission units, applicability determinations, or the basis for the applicability determinations are affected by the revisions to the GOP. If the revisions in the GOP do not affect your site, a new ATO is not required.

TCEQ Considers Proposed Rulemaking to Amend 30 TAC 305 and 330 pertaining to MSW Applications. On March 20, 2020, TCEQ announced plans to consider a rulemaking amending sections of 30 Texas Administrative Code 305 and 330 to incorporate recent legislative changes specific to Municipal Solid Waste (“MSW”) permit applications. The legislative changes include increasing the MSW application fee from $150 to $2,050. The increase would only apply to new applications, not those already submitted, and applies to new applications and amendments, but does not include modifications.

In addition, the future rulemaking requires the TCEQ to perform a “site assessment” before issuing a MSW permit. Next, the future rulemaking will exclude gasification and pyrolysis from regulation as an MSW facility, but require a showing that the product is valuable. And finally, the TCEQ seeks to repeal Chapter 330, Subchapter F, Analytical Quality Assurance and Quality Control in the future rulemaking. The chapter was found to be obsolete as a result of the Quadrennial Rules Review, which found that the rules “expired on January 1, 2009 and the agency uses other guidance documents to implement data quality controls and sampling guidelines.”

The anticipated comment period is April 24 through May 25, 2020.

Texas State Soil and Water Conservation Board (“TSSWCB”)

TSSWCB Finalizes Rules to Implement Dam Infrastructure Projects. On February 6, 2020, the TSSWCB’s final rules implementing Senate Bill 500—which appropriated $150 million for dam infrastructure projects—went into effect.

The final rules set out general definitions and provide requirements for requesting and submitting an application for funding from the $150 million supplemental funds pool. The rules also lay out how the TSSWCB administers the funds and reviews the applications. The TSSWCB will distribute funds based on six factors: (1) accuracy and completeness of the application; (2) risk of dam failure; (3) potential loss of life due to dam failure; (4) potential damage to critical infrastructure due to dam failure; (5) the extent and type of structural repair needed; and (6) the ability of sponsors to provide the required percentage of the total cost of the project through funds not originating from state appropriations.

The final rules are located in 31 TAC §§ 529.51, 529.52, 529.54-57. More information is also available at the TSSWCB’s website: www.tsswcb.texas.gov/flood-control-repair-projects.

Texas Senate

Senator Kirk Watson Retires from the Texas Senate. Kirk Watson, Texas State Senator for District 14, announced that he will retire from the Senate effective April 30, 2020 to become Dean of the University of Houston Hobby School for Public Affairs. Watson had served as senator since 2006 and previously served as the Mayor of Austin from 1997 to 2001.

In a statement released on February 18, 2020, Watson noted that his new role will give him “a unique opportunity to serve this state” in an institution that will be “a leader in 21st Century public policy education.” Watson also stated that the two months between his announcement and his retirement should allow “a reasonable amount of time before a special election,” which will “minimize the time that Senate District 14 will be without a senator.”

Texas Public Utility Commission (“PUC”)

CenterPoint Energy Rate Case Settlement Approved by PUC. On April 5, 2019, CenterPoint Energy Houston Electric, LLC (CenterPoint or Company) filed its application to increase system-wide transmission and distribution rates by approximately $161 million annually (Docket No. 49421). This is CenterPoint’s first full rate case in a decade.

The case went to hearing in June 2019, but before the PUC could finally decide the extent to which it would adopt the Administrative Law Judges’ (ALJs) Proposal for Decision, the parties reached an agreement that resolved the issues on mutually satisfactory terms. The key principles of the parties’ agreement are outlined below:

1. CenterPoint’s total base revenue requirement would increase by $13 million instead of the $161 million increase originally requested by the Company;
2. CenterPoint’s return on equity (ROE), which is a component of the return or “profit” that the utility is permitted to earn, would be 9.4% on its invested capital. This is compared to its original request of 10.4%. In its last case, CenterPoint obtained an approved ROE of 10%. Under the agreement, its capital structure for regulatory purposes would be 57.5% debt and 42.5% equity, a lower-cost capital structure than the 55% debt and 45% equity that its current rates are based upon;
3. The impact of the resulting increase on class revenues will vary by customer class, with residential customers receiving a 1.22% increase, and small and large secondary customers receiving a 7.8% decrease and 8.45% increase, respectively. Lighting will receive a decrease of approximately 21% to 26%, depending on lighting class;
4. CenterPoint agrees to not seek recovery of its own rate case expenses dating back to its last rate case, approximately a decade ago, and will pay cities’ rate case expenses without recovering those amounts in rates. CenterPoint expects that this foregone recovery will be approximately $12 million; and
5. CenterPoint will not file a Distribution Cost Recovery Factor (DCRF) case in 2020. A DCRF case is a “mini” rate case, focused on distribution (poles and wires) investment that CenterPoint typically files each year in April.

The PUC approved the settlement at its February 14, 2020 Open Meeting, but directed its Docket Management division to make changes to the order to prevent the settlement from binding future Commissions on certain issues. On March 9, 2020, the PUC issued a written order consistent with the Commissioners’ direction. New rates will go into effect on April 23, 2020.

AEP Rate Case Approved by PUC at Open Meeting, Written Order to Follow. As we have previously reported, on May 1, 2019 AEP Texas Inc. (AEP) filed its application to increase rates by $35.14 million per year (Docket No. 49494). The case went to hearing in July 2019, but before the PUC could decide whether to adopt the Administrative Law Judges’ (ALJs) Proposal for Decision (PFD), the parties reached an agreement that resolved the issues on mutually satisfactory terms. The key aspects of the parties’ agreement are:

The parties agreed that it is reasonable for AEP to consolidate the rates and tariffs of its Central and North Divisions;

2. AEP’s total base revenue requirement would decrease by $40 million instead of the $35.14 million increase originally requested by the Company;
3. AEP’s return on equity (ROE), which is a component of the return or “profit” that the utility is permitted to earn, would be 9.4% on its invested capital. This is compared to its original request of 10.5%. Under the agreement, its capital structure for regulatory purposes would be 57.5% debt and 42.5% equity, a lower-cost capital structure than the 55% debt and 45% equity that the ALJs’ PFD recommended;
4. The impact on class revenues of the resulting change will vary by customer class and whether the customer is located in the Central or North Division. For prior Central Division customers, residential customers receive an increase of approximately 3.6%; secondary customers receive an approximately 26.3% decrease; and lighting will receive a decrease of approximately 11.2%. Compared to the prior North Division customers, residential customers receive an approximate 33.8% decrease; secondary customers receive an approximate 65.0% decrease; and lighting will receive a decrease of approximately 13.3%;
5. To address the effects of the Tax Cuts and Jobs Act of 2017 (TCJA), AEP agreed to refund $108 million through a separate rider deemed the Income Tax Refund (ITR) Rider. AEP will refund $76.5 million to distribution customers through its proposed ITR Rider over a one-year period, implemented separately for each division. AEP will refund $31.5 million to transmission customers as a one-time credit through the Company’s interim transmission cost of service (TCOS) proceedings; and
6. AEP agreed to not seek recovery of its own rate case expenses and will pay cities’ rate case expenses without recovering those amounts in rates. AEP expects that this foregone recovery will be approximately $10 to $11 million.

The PUC approved the settlement at its February 27, 2020 Open Meeting, and issued its order in the case on April 6, 2020.

Parties Comment on PUC Rulemaking, Establishing the Cybersecurity Monitor. The PUC is currently considering public comments on its Proposal for Publication of new PUC rule 16 Texas Administrative Code (TAC) § 25.367, in Project No. 49819. This proposed rule implements two newly enacted laws (SB 64 and SB 936) that establish an independent third-party “cybersecurity monitor” (CSM) and related programs, in order to establish best practices for combatting cybersecurity threats against the electricity industry.

Interested parties submitted initial comments in Project No. 49819 on January 27, 2020, and reply comments on February 10, 2020. Many entities that will be subject to the legislation and new rule submitted comments with similar concerns, mainly regarding the proposed requirements on entities that will be monitored by the CSM (Monitored Utilities), enforcement of such requirements, the functions of the CSM, and the confidentiality of information provided by Monitored Utilities. Further, the Monitored Utilities emphasize that it is clear that the legislature intended participation in CSM to be entirely voluntary in nature. Along with Electric Reliability Council of Texas (ERCOT) utilities, municipally-owned utilities are required to participate in the CSM programs, while utilities that are outside of ERCOT may opt in or out of the programs.

Ironically, on January 28, 2020, during the comment period for the Proposal for Publication, the PUC’s website was hacked. The PUC’s home page was briefly obscured by a single banner reading “Hacked by Anonymous Iranian.” PUC officials said that no indication exists that the attack was actually perpetrated by Iran, and that no sensitive information was exposed. However, this event highlights the cyber threat faced by the power sector and its regulators.

We will provide updates as this rulemaking progresses.

Lubbock CCN Transmission Line Approved. On September 1, 2017, the City of Lubbock, acting through its municipally-owned utility Lubbock Power & Light (LP&L), filed an application with the PUC seeking authority to transfer a portion of its electrical system from SPS to ERCOT (Docket No. 47576). The PUC ultimately approved this application and issued an order to this effect on March 15, 2018, whereby it found that the transmission buildout endorsed by ERCOT was a reasonable plan for integrating the affected load into ERCOT. The PUC further found that June 1, 2021 was a reasonable integration date. LP&L and Sharyland Utilities were designated as the entities that would own and operate the lines. Later, Oncor acquired Sharyland’s transmission assets, and took its place as a “Joint Applicant” in the follow-up proceedings for Certificates of Convenience and Necessity (CCNs) necessitated by the Commission-approved transmission integration plan.

The approved transmission plan included the integration of the affected load through the construction of four separate transmission projects. For each project, Sharyland (and subsquently, Oncor) and LP&L would work together to file the applications and obtain the necessary approvals from the PUC. In time, these applications were filed and processed in Docket Nos. 48625, 48668, 48909, and 49151. The PUC has previously issued orders in 48625, 48668, and 48909, approving the projects and authorizing the construction of these lines.
At its Open Meeting on February 27, 2020, the PUC considered the Proposal for Decision (PFD) in Docket No. 49151, and weighed the approval of the last line in the process contemplated by the approved transmission plan. After discussion, the PUC approved the PFD, subject to a few modifications, and has thereby approved the final portion of the transmission projects found necessary to integrate LP&L’s load into ERCOT.

WETT Files for New Ownership at PUC. On February 24, 2020, Wind Energy Transmission Texas, LLC (WETT), AxInfra US LP (AxInfra), Hotspur HoldCo 1 LLC (Hotspur 1), Hotspur HoldCo 2 LLC (Hotspur 2), and 730 Hotspur, LLC (730 Hotspur) (together, Joint Applicants) filed an application with the PUC (Docket No. 50584) for approval of a sales transaction that would result in the transfer of ownership and control of WETT to AxInfra, an investment fund managed by Axium Infrastructure US, Inc. (Axium US). The Steering Committee of Cities Served by Oncor (OCSC) has intervened in the proceeding, as it will impact service in OCSC’s member cities.

WETT is a Texas-based transmission service provider (TSP) that operates exclusively in the Electric Reliability Council of Texas (ERCOT). The PUC designated WETT as a Competitive Renewable Energy Zone (CREZ) TSP in 2009 and granted it a certificate of convenience and necessity (CCN) in 2010. Headquartered in Austin with a field office in Big Spring, WETT owns and operates transmission facilities across approximately 20,000 square miles of predominately rural areas of West Texas. Specifically, WETT owns and operates six switching stations, and 500 circuit miles of transmission lines carried over 375 miles of right-of-way in 11 counties. In addition to the CREZ facilities WETT has operated for years, WETT has also accommodated interconnections to wind and solar generators nears its facilities.

AxInfra is an investment fund whose holdings consist exclusively of infrastructure assets located in the United States. AxInfra is managed by Axium US, an independent fund manager dedicated exclusively to “high-quality” infrastructure. Axium US and its affiliates manage a diversified asset portfolio valued at about $4.3 billion as of December 2019.

Under the application, AxInfra will ultimately control WETT. 730 Hotspur will acquire a non-controlling minority interest in Hotspur SPC, an Axium subsidiary that will have an upstream, indirect ownership interest in WETT.

PUC staff has filed recommendations that WETT’s notice is reasonable and its application is sufficient for further review.

On March 20, the PUC’s Office of Policy and Docket Management filed a draft preliminary order, recommending a list of issues to be addressed in the matter. The PUC approved the list of issues at its March 26 Open Meeting, and issued an Order reflecting its approval.

Pursuant to the parties’ proposed procedural schedule, filed on March 25, 2020, the Hearing on the Merits will take place on June 25-26, 2020.

We will provide updates as this case progresses.

New Numbering Plan for the Metroplex. On October 11, 2018, the North American Numbering Plan Administrator (NANPA) filed a petition with the PUC for approval of an overlay area code for the Dallas Metroplex area. The PUC issued a final order on February 27, 2020, in Project No. 48765 approving the new overlay code 945. The current area codes—214, 469, and 972—apply within the counties of Collin, Dallas, Denton, Fannin, Hunt, Johnson, Kaufman, and Tarrant (the numbering plan area, or NPA). The central office codes (CO or NXX) are expected to be exhausted by the third quarter of 2021. The new all-services distributed overlay will cover the same geographic area and is projected to last 13 years. When the 214, 469, and 972 numbers are exhausted, the new overlay code of 945 will be assigned to new numbers. Current customers will retain their existing area code, and will continue to dial 10 digits for a local call.

Despite Senator Rodriguez’s Request, El Paso City Council Approves Transfer of El Paso Electric Company to Sun Jupiter. At its Open Meeting on January 16, 2020, the PUC issued an order adopting the parties’ stipulation and settlement agreement regarding IIF US Holding 2 LP (IIF) and Sun Jupiter Holdings LLC’s (Sun Jupiter) purchase of El Paso Electric Company (EPE). However, on February 3, 2020, Texas Senator José Rodriguez sent a letter to the Mayor and City Council Members of El Paso, requesting that they postpone their approval of the sale until federal regulators have completed their proceedings and the question of ownership of EPE has been answered.

Senator Rodriguez’s letter emphasizes the importance of the decision to sell the monopoly utility and warns that the lack of transparency regarding exactly who is buying and controlling EPE is problematic. Senator Rodriguez describes Public Citizen’s research into JP Morgan’s degree of ownership and control of IIF, and the issues that JP Morgan’s ownership could bring. In sum, Senator Rodriguez explains that federal regulators are examining the same questions regarding the relationship between IIF and JP Morgan, and therefore, that the City should delay action on the transfer of EPE until the federal proceedings are completed.

Notwithstanding Senator Rodriguez’s request, on February 4, 2020, the El Paso City Council voted 4 to 2 in favor of approving the agreement. EPE is hoping to close the deal by early summer 2020, but still needs final federal and state approvals.

Annual Revisions to Access Line Fees. Since 2001, the PUC has used Project No. 24640 as the docket under which it annually adjusts access line fees, as required by Local Government Code Section 283.055(g). The statute permits cities to increase the rates by an amount equal to one-half the annual change in the most recent consumer price index.

On March 27, 2020, the PUC approved the Order for the 2020 adjustment, resulting in a 0.7267% increase in access line rates. The Order also set the maximum rates that each city may charge per access line (listing every city and the 2019 and 2020 maximum rates per category in an attachment to the Order). The CPI used in the 2020 adjustment is the one for all urban consumers in the South, which is the same formula used in 2019.

Additionally, the Order permits cities to notify the PUC by April 30, 2020 of its preferred rates:

• A municipality whose 2019 city-preferred access line rates are below its 2019 CPI-adjusted maximum access line rates will remain at its 2019 city-preferred rates unless it notifies the Commission of its desired rates by April 30, 2020.
• For a municipality whose 2019 city-preferred access line rates equal its 2019 CPI-adjusted maximum access line rates, the 2020 city-preferred access line rates will be set at the 2020 CPI-adjusted maximum access line rates unless the municipality notifies the PUC of its desired rates by April 30, 2020.
• The PUC will then issue an order setting new preferred access line rates incorporating any reductions or increases requested by cities. The adjustments are required to be implemented prospectively, no later than July 1, 2020.

Railroad Commission of Texas (“RCT”)

CenterPoint Gas Rate Case Settlement. On November 14, 2019, in Gas Utility Docket (GUD) No. 10920, CenterPoint Energy Entex and CenterPoint Energy Texas Gas (CenterPoint) filed their Statement of Intent to change rates with the Railroad Commission of Texas (RCT), and with all municipalities exercising original jurisdiction within their Beaumont/East Texas Division service area. In its filing, CenterPoint seeks to increase system-wide distribution rates by $6.8 million per year (an increase of 9.4%).

After all intervening city groups and RCT Staff filed testimony, the parties reached an agreement that disposes of all issues in the case. While the Hearing on the Merits was cancelled, the parties admitted testimony as exhibits into the evidentiary record. The parties have finalized the settlement agreement and will soon file it with the Administrative Law Judge. Subsequently, the RCT will need to approve the settlement agreement at an Open Meeting. We will provide updates as this case is finalized.

TGS Rate Case Update. On December 20, 2019, in GUD No. 10928, Texas Gas Service Company (TGS or Company), a Division of ONE Gas, Inc. (ONE Gas), filed its Statement of Intent to change gas rates at the RCT, and in all municipalities exercising original jurisdiction within the City of Beaumont and the incorporated areas of the Central Texas Service Area (CTSA) and Gulf Coast Service Area (GCSA), effective February 6, 2020. The RCT suspended the effective date of the rate request for 150 days, until July 5, 2020.
In its filing, TGS is seeking to: (1) increase its gas rates on a system-wide basis by $17 million per year; (2) consolidate the CTSA, GCSA, and the City of Beaumont into a new service area called the Central-Gulf Service Area (CGSA); and (3) implement new CGSA tariffs and withdraw the CTSA and GCSA tariffs for incorporated and environs areas.

Parties conducted a technical conference on February 18, 2020. Otherwise, the parties are conducting discovery and attempting to negotiate the settlement of the case. Intervenor testimony was filed on March 24, 2020, and RCT Staff filed testimony on March 31, 2020.

COVID-19-Related Summaries

EPA Authorizes Telecommuting and Voluntary Unscheduled Leave Due to COVID-19. On March 16, 2020, EPA Administrator Andrew Wheeler extended full-time telework options and voluntary scheduled leave to EPA employees across the nation. The decision came after a March 15, 2020 memo from the Office of Management and Budget (“OMB”) that directed all federal agencies to offer “maximum telework flexibilities” in light of the evolving coronavirus situation across the nation.1 Wheeler’s directive is effective through April 3, though the memo states that “the timing will be assessed continually.”2 Wheeler released a video in which he stated: “My expectation is that most everyone on the EPA team across the country is working at home, unless there is a compelling mission critical reason for you to be in the office.”3

Though telework is encouraged, EPA’s offices remain open across the country. The agency also stated that there have not been any changes in enforcement or inspections. Going forward, it is unclear how, or if, social distancing measures will affect field enforcement like in-person inspections of industrial facilities.4 Eric Shaeffer, the former director of EPA’s Office of Civil Enforcement, stated that national self-quarantine “would obviously start to cramp inspections as everyone is being advised to avoid social contact.” Though much of enforcement work happens remotely, COVID-19 may start to affect environmental enforcement as companies cut down on business hours and inspectors reduce field visits.5

Footnotes:
1Stephen Lee, Coronavirus Spurs EPA to Roll Out Nationwide Telecommuting, BLOOMBERG ENVIRONMENT (Mar. 16, 2020), https://news.bloombergenvironment.com/environment-reporter/coronavirus-spurs-epa-to-roll-out-nationwide-telecommuting
2Corbin Hiar, White House Calls for ‘Maximum Telework’ in D.C. Region, E&E NEWS (Mar. 16, 2020), https://www-eenews-net.eu1.proxy.openathens.net/greenwire/stories/1062620765/search?keyword=EPA
3Corbin Hiar, Wheeler Urges Telework as 2nd Staffer Tests Positive, E&E NEWS (Mar. 20, 2020), https://www-eenews-net.eu1.proxy.openathens.net/greenwire/stories/1062655813/search?keyword=telework.
4EPA Grudgingly Embraces Telecommuting Amid Pandemic, BLOOMBERG LAW PARTS PER BILLION PODCAST (Mar 18, 2020), https://news.bloombergenvironment.com/environment-and-energy/epa-grudgingly-embraces-telecommuting-amid-pandemic-podcast
5Stephen Lee & Amena Saiyid, Virus Could Bite into Environmental Enforcement: Ex-Officials (1), BLOOMBERG ENVIRONMENT (Mar. 19, 2020), https://news.bloombergenvironment.com/environment-and-energy/virus-could-bite-into-environmental-enforcement-ex-officials-say.

In Response to COVID-19, TCEQ Closes its Offices to the Public, Authorizes Full-time Teleworking for its Staff, and Relaxes Certain Reporting Requirements. On March 23, 2020, TCEQ closed all buildings—both in Austin and in the regional offices—to the general public. TCEQ staff are still operating the buildings on a skeleton-crew basis, but most TCEQ employees will telework through April 3.

TCEQ also announced its intention to exercise “administrative relief and enforcement discretion” for various reporting requirements. Regulated entities are advised to check the TCEQ webpage for updates, but as of March 23, two program changes are listed: First, point source emissions inventory reports that were originally due March 31, 2020 may now be submitted up to April 30, 2020. Second, reporting deadlines for the Mass Emissions Cap and Trade (MECT) program and the Highly Reactive Volatile Organic Compounds Emissions Cap and Trade (HECT) programs have similarly been pushed back from March 31 to April 30. For both programs, TCEQ also notes that it “will consider additional enforcement discretions regarding this deadline as conditions warrant.”

TCEQ also posted a notice that responses to requests for public information may be delayed “until the agency resumes normal operations.” For more information on TCEQ’s responses to COVID-19, visit: https://www.tceq.texas.gov/response/covid-19.

“Agency Highlights” is prepared by Lauren Thomas in the Firm’s Water Practice Group; Sam Ballard in the Firm’s Air and Waste Practice Group; and Patrick Dinnin in the Firm’s Energy and Utility, Litigation, and Compliance and Enforcement Practice Groups. If you would like additional information or have questions related to these cases or other matters, please contact Lauren at 512.322.5850 or lthomas@lglawfirm.com, Sam at 512.322.5825 or sballard@lglawfirm.com, or Patrick at 512.322.5848 or pdinnin@lglawfirm.com.