Environment

July 14, 2011

TCEQ

Appropriations for Texas Commission on Environmental Quality (TCEQ)

Under the Appropriations Act (HB 1), the agency will receive $693.2 million for the 2012-2013 biennium, which is a reduction of $305 million from 2010-2011 biennium.

Several programs were impacted by this reduction:

• TERP received $114 million for the biennium with a contingency appropriation of $8 million per year if revenue exceeds the biennial revenue estimate (BRE), a potential reduction of 50%.

• LIRAP/LIP is funded at $12.5 million for the biennium, an 88% reduction from the 2010-2011biennium.

• Petroleum Storage Tank (PST) program was appropriated $43.9 million for the biennium. A decrease of $8.3 million from the 2010-2011biennium.

• Superfund was appropriated $48.26 million for the biennium. A decrease of $13.3 million from the 2010-2011biennium.

• TCEQ grant programs received a 50% reduction from 2010-2011 levels. Air Quality Planning was appropriated $3.57 million and Local Solid Waste Planning was appropriated $10.89 million for the biennium.

*TCEQ Method of Finance (HB 1) Method of Finance**	FY 2012	FY 2013
General Revenue	$5.93 million	$5.63 million
Low Level Waste # 088	$2.03 million	$2.03 million
Used Oil Recycling # 146	$865,000	$852,967
Clean Air #151	$52.46 million	$48.83 million
Water Resource Management #153	$55.74 million	$55.63 million
Watermaster Administration #158	$1.22 million	$1.22 million
Occupational Licensing #468	$1.68 million	$1.68 million
Waste Management #549	$28.06 million	$28.30 million
Hazardous & Solid Waste Remediation Fee #550	$23.88 million	$23.96 million
Petroleum Storage Tank Remediation #655	$25.48 million	$18.48 million
Solid Waste # 5000	$5.49 million	$5.49 million
Environmental Testing Lab Accreditation #5065	$706,842	$706,842
Texas Emissions Reduction Plan #5071	$65.17 million	$65.17 million
Dry Cleaning Facility Release #5093	$3.72 million	$3.72 million
Operating Permit Fees #5094	$31.06 million	$31.05 million
Television Recycling	$150,000	$150,000
Federal Funds	$39.17 million	$39.40 million
Other	$9.07 million	$9.07 million

* Source TCEQ Legislative Wrap-Up Report

TCEQ Key Legislation

HB 451 – Lucio/Hegar – Requires the TCEQ to establish a “Don’t Mess With Texas Water” program to prevent illegal dumping that affects surface waters of the state. (Effective September 1, 2011.)
HB 1981 – Smith,Wayne/Gallegos – Modifies the TCEQ’s current Air Pollutant Watch List (APWL) process, including changes to the requirements for publishing notice and allowing public comment. (Effective September 1, 2011.)
HB 2694 – Smith, Wayne/Huffman – Continues the Texas Commission on Environmental Quality for 12 years, until 2023. Also makes changes to several program areas, such as focusing the Dam Safety Program on the most hazardous dams in the state, transferring the authority for making groundwater protection recommendations regarding oil and gas activities to the Railroad Commission, and increasing the maximum to $25,000 for almost all penalties and $5,000 for others, such as water rate penalties. (Effective September 1, 2011.)
SB 20 & SB 385 –Williams/ West & Fraser – Establishes three new grant programs under TERP: the natural gas vehicle rebate program, a program to fund natural gas fueling stations, and an alternative fueling facilities program. (Effective September 1, 2011.)
SB 329 – Watson/Chisum – Creates a television equipment recycling program. Includes shared responsibility among consumers, retailers, manufacturers, and the state government for recycling covered television equipment. (Effective September 1, 2011.)
SB 1134 – Hegar/Craddick – Prohibits TCEQ from promulgating new or amending existing authorizations [Permits by Rule (PBR) or Standard Permits (SP)] for the oil and gas industry without performing a regulatory impact analysis (RIA), extensive monitoring, and correlated modeling. (Effective immediately.)
SB 1258 – Duncan/Hardcastle – Allows TCEQ to issue a Permit By Rule to enable counties or municipalities with a population of 10,000 or less to dispose of demolition waste from buildings that are abandoned or found to be a nuisance. Disposal could only occur on land that is owned by the county and would qualify for an arid exemption. (Effective immediately.)

Summary of TCEQ Sunset Legislation – HB 2694

Article 1

• Continues the Texas Commission on Environmental Quality for 12 years, until 2023.

• Requires that TCEQ Commissioners resign their position if contributions are accepted for a campaign for an elected office.

• Provides for a process to allow PST remediation contractors currently cleaning up sites that have been eligible for reimbursement to continue their work.

• Provides direction to TCEQ to focus agency efforts on the most hazardous dams in the state.

• Allows agency to enter into agreements with dam owners regarding adequacy of dam or spillway, including timeline to comply.

• Exempts from dam safety regulations privately owned dams that impound less than 500 acre feet and are either low or significant hazard dams.

Article 2

• Transfers, on September 1, 2011, the authority for making groundwater protection recommendations regarding oil and gas activities from TCEQ to the Railroad Commission (RRC).

• Authorizes RRC, not TCEQ, to issue letters of determination associated with geologic storage of anthropogenic carbon dioxide (CO2).

Article 3

• Requires the Executive Director to provide assistance and education to the public on environmental matters under the agency’s jurisdiction.

• Focuses the Public Interest Counsel’s (PIC) efforts on representing the public interest in matters before the Commission.

• Requires the commission to define, by rule, factors PIC will consider in representing the public interest.

Article 4

• Requires changes to the current Compliance History program requirements.

• Requires the TCEQ to adopt a general enforcement policy, by rule, which includes calculating penalties to reduce an economic benefit gained through noncompliance.

• Increases the maximum to $25,000 for almost all penalties and $5,000 for others, such as water rate penalties.

• Adds language to allow local governments to apply penalty dollars levied on them by the commission toward the cost of compliance in the form of a Supplemental Environmental Project.

• Reinstates common carrier liability and provides affirmative defense conditions for common carriers of petroleum products.

• Expands the use of the PST remediation fee to remove underground or aboveground storage tanks if certain criteria are met.

• Reauthorizes the PST remediation fee at the current level with no expiration date.

• Increases the trigger to determine whether a water district can submit a financial report instead of an audit from $100,000 to $250,000 in gross receipts.

• Provides for a public hearing and submission of public comment on permit amendment applications submitted by electric generating facilities (EGFs) to solely comply with Maximum Achievable Control Technology (MACT).

• Provides specific timelines for agency to issue the MACT-related permit.

Article 5

• Requires water right holders to provide monthly water use reports to the commission upon request during times of drought or emergency shortages of water or to respond to a complaint.

• Authorizes that in a “period of drought or other emergency shortage of water” the executive director may temporarily suspend a water right and adjust the diversion of water between water right holders based on Texas Water Code Section 11.024 and Section 11.027.

• Directs the executive director to evaluate at least once every five years whether a watermaster should be appointed in water basins not covered under the jurisdiction of a watermaster. The results of the evaluation and subsequent recommendations would be reported to the commission.

Article 6

• Requires that the compact waste disposal fee must include funds to support the activities of the Low Level Radioactive Waste Disposal Compact Commission (TLLRWDCC) and creates a dedicated TLLRWDCC Account.

• Eliminates three existing water and wastewater utility application fees – rate changes, CCNs, and sale, transfer or merger of a CCN.

Article 7

• Requires the agency, when provided an electronic copy of a water rate case, to make it available to the public at a reasonable cost and at no cost to OPUC.

Article 8

• Abolishes Texas On-site Wastewater Treatment Research Council (TOWTRC) and transfers duties to TCEQ on September 1, 2011.

Article 9

• Allows e-mail to be used by public utilities and cities to send required notice of rate changes and for the public to send statement of intent.

Article 10

• Provides changes to Contested Case Hearings (CCH) process, including prohibiting a state agency from contesting the issuance of a permit or license by the commission under this subsection. Requires the ED to participate as a party in contested case hearings.

• Provides that for a SOAH hearing using pre-filed testimony, all discovery must be completed before the deadline for the submission of that testimony.

Water

SB 332 – Fraser/Ritter – defines that a landowner owns the groundwater below the surface of the landowner’s land as real property. The bill provides for a groundwater conservation district’s authority to regulate groundwater through restrictions on well spacing, tract size, and other types of restrictions based on proportional share of total groundwater production in the district, and also provides for the authority of the Edwards Aquifer Authority, the Harris-Galveston Subsidence District, and the Fort Bend Subsidence District to do the same. The bill also requires a groundwater conservation district, when adopting rules limiting groundwater production, to consider a landowner’s groundwater ownership and rights and the public interest in preserving, protecting, recharging, and preventing the waste of groundwater and in controlling subsidence. (Effective September 1, 2011.)

SB 660 – Hinojosa/Ritter – Relating to the review and functions of the Texas Water Development Board (TWDB), including the functions of the board in connection with the process for establishing and appealing desired future conditions in a groundwater area. Requires the OAG to, upon request of the TWDB, take legal action to compel a recipient of TWDB’s financial assistance to cure or prevent default in payment. Requires TWDB and the TCEQ to require the methodology and guidance for calculating water use and conservation developed under section 16.403 of the Water Code to be used in water conservation plans and reports to TWDB or TCEQ. Abolishes the Texas Geographic Information Council and clarifies the Texas Natural Resources Information System’s responsibilities related to coordinating and advancing geographic information initiatives in the state. Requires TWDB, as part of the State Water Plan, to evaluate the state’s progress in meeting its future water needs and include an analysis of how many state water plan projects received financial assistance. Requires municipalities and water utilities with more than 3,300 connections to implement reporting measures established by TWDB and TCEQ. Municipalities and water utilities will be required to implement the reporting measures only at a level currently available to the entity. TWDB and TCEQ cannot adopt a rule that would require an entity to report water use data that is more detailed than the entity’s billing system is capable of producing. Establishes a process whereby non-self supporting general obligation water bonds could be removed from the Constitutional Debt Limit under certain circumstances. Requires GCDs to adopt relevant Desired Future Conditions (DFC). Requires groundwater management areas to document consideration of factors or criteria to be considered in adopting DFCs and to submit that documentation in an explanatory report to TWDB. (Effective September 1, 2011.)

SJR 4 – Hinojosa/Lucio – proposing a constitutional amendment providing for the issuance of additional general obligation bonds by the Texas Water Development Board. More details under “Voting” section.

Fracking

HB 3328 – Keffer/Fraser- instructs the Railroad Commission to write disclosure rules for chemicals deemed hazardous to on-site rig workers by July 1, 2012. The bill also requires rulemaking, for disclosure of all other chemicals not listed on the completed form used during fracking, to be completed no later than July 1, 2013. HB 3328 does allow for certain protections providing certain chemicals that may be deemed as proprietary trade secrets are exempted from the reporting requirements provided certain requirements are met.

HB 3328 – Key Components:

Requires the Railroad Commission to adopt rules that require an operator to disclose chemicals used in hydraulic fracturing of an oil or gas well by completing the form on the Internet chemical disclosure registry developed and implemented by the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC).
Information includes each chemical ingredient regardless of whether it must be listed on a Material Safety Data Sheet under the federal Occupational Health and Safety Act (OSHA).
Requires an operator to post the completed form on the GWPC/IOGCC website.
Requires the operator to submit the completed form to the Commission with the well completion report. In addition to the completed form, an operator would also be required to provide to the Railroad Commission a list of all other chemical ingredients not listed on the completed form that were intentionally included and used for the purpose of creating a hydraulic fracturing treatment.
An operator is not required to disclose ingredients that were not purposely added to the hydraulic fracturing treatment, occur incidentally, or are not disclosed to the operator.
Requires the Railroad Commission to adopt rules to prescribe a process by which an operator or a service company could designate certain information as a trade secret not subject to Texas open records law, and authorizes the entity claiming the trade secret to withhold information asserted to be a trade secret.
Requires a trade secret claim be filed within 2 years of filing the completion report with the Commission and limits a person who could challenge such a claim to the landowner on whose property the well is located or who owns adjacent property, or a department or agency of Texas.
Requires rules to include an efficient process for an entity for whom a trade secret claim has been claimed or approved to provide information to a health professional or an emergency responder in accordance with OSHA regulations.
Requires that in the event of a trade secret challenge that the Railroad Commission notify the service company performing the hydraulic fracturing treatment on the relevant well, the supplier of the additive or chemical ingredient for which the trade secret claim is made, or any other owner of the trade secret being challenged and provides the owner an opportunity to substantiate its trade secret claim.
Requires the Railroad Commission to develop a process for making the legal determination as to whether information claimed to be a trade secret actually qualified as such under the Open Records Act as modified by the bill.

Next steps:

Texas Railroad Commissioners voted Monday, July 11, to expedite rulemaking requiring public disclosure of chemicals and other ingredients used during hydraulic fracturing for natural gas. Draft rules are expected by the end of August. The Commissioners hope to hold a special public hearing in September in Austin on the proposed rules.

Energy and Water Conservation

HB 51 – Lucio/Hinojosa – Energy Conservation Codes: provides that: (1) a city shall establish procedures to track and report to the State Energy Conservation Office on implementation of the energy efficiency chapter of the International Residential Code and the International Energy Conservation Code; (2) the Energy Systems Laboratory at Texas A&M University shall report its findings to the city, including an estimate of any energy savings potential above the unamended code from local amendments and annually submit a report to the Texas Commission on Environmental Quality that: (a) identifies the cities and counties whose codes are more stringent than the unamended code, and whose codes are equally stringent or less stringent than the unamended code; and (b) quantifies energy savings and emissions reductions from this program for consideration in the state implementation plan for emissions reduction credit; (3) the laboratory may provide local jurisdictions with technical assistance concerning implementation and enforcement of the International Energy Conservation Code and the energy efficiency chapter of the International Residential Code, including local amendments to those codes; and (4) the laboratory may conduct outreach to the real estate industry, including real estate agents, home builders, remodelers, appraisers, and financial institutions, on the value of energy code compliance and verified, above-code, high-performance construction. (Effective September 1, 2011.)

H.B. 1728 – Keffer/Harris – Energy Efficiency: provides that: (1) notwithstanding other law, the governing body of a local government – including a city – may use any available money, other than money borrowed from this state, to pay the provider of the energy or water conservation measures under an energy savings performance contract, and the governing body is not required to pay for such costs solely out of the savings realized by the local government under an energy savings performance contract; and (2) the governing body may contract with the provider to perform work that is related to, connected with, or otherwise ancillary to the measures identified in the scope of an energy savings performance contract. (Effective September 1, 2011.)