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The Texas Commission on Environmental Quality convened a work session to discuss potential changes to the penalty policy and compliance history rule.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

The Commission did not take up Item 1 relating to the TCEQ LAR and did not meet in executive session.

Item 2. Discussion on general compliance and enforcement strategies, proposed revisions to the Commission’s Penalty Policy, and potential revisions to the Commission’s Compliance History rules (30 Texas Administrative Code Chapter 60). (Link to materials)

  • Chair Jon Niermann, TCEQ – Wanted you to address what procedure we have planned for the penalty policy

 

Toby Baker, Executive Director TCEQ

  • Will talk about this when we get to that procedure
  • Have met goals to streamline agency functions; we’ve reduced backlog for NSR permits by 92%, permits exceeding target has decreased significantly, draft permit timeline has significantly shortened
  • Have been lagging on the goal of accountability
  • Underlying problem is that we aren’t a process safety regulator, we regulate emissions; this causes confusion with the public, press, and legislature
  • TCEQ is commonly treated as a first responder agency, has caused issues with the large-scale events in recent years and have had to address process safety problems
  • Question remains how TCEQ can handle process safety issues within the mission statement of the TCEQ
  • Large scale events we’ve seen are not protective of public health, not protective of state resources, and not consistent with sustainable economic development; references Houston shipping channel fire bringing state economy to a halt
  • Also seeing soft economic impacts, e.g. impacts on operators who are doing the right thing
  • These events are a complete waste of public resources, public is okay with TCEQ responding, but the amount of public money expended to respond can be unacceptable
  • Internal reforms to address issues with TCEQ operations
    • Starting to hire better investigators, increasing transparency, being more hands on with investigations, etc.
    • Working closely recently with the AG’s Office, have referred quite a few cases
    • Looking also at the agency, see problems not just in Beaumont, Houston, Midland; seeing high turnover all across the agency, new hires are trained and then hired out by private companies
    • Found money inside TCEQ to raise base pay for environmental investigators in Beaumont, Houston, and Midland; want to take this to the LAR
    • Improving equipment: shipping channel monitor upgrades, mobile monitoring resources, etc.
    • Began enhanced investigations based on risk and fenceline monitoring earlier this year
  • Externally, the tools we have are penalty policy and compliance history rule
  • Facilities that are in compliance shouldn’t have an issue with these policies; protecting the good operators from the bad operators
  • Compliance History Rule
    • Speaking of ITC fire, TPC explosion, & Chemco event; events caused TCEQ and local governments to expend significant resources to respond
    • Difficult to present TPC site as satisfactory after an event like this
    • Idea of the Compliance History Rule is to take certain circumstances that are so extreme that they have to be considered, currently rule does not allow us to address these events
    • Circumstances could include: causing a death, shutting down the Houston ship channel, massive evacuations
  • 3 specific changes will dramatically change the Penalty Policy: civil suit rule requires TCEQ to turn matters over to AG’s Office for certain civil matters, entities could be subject to penalties in excess of what TCEQ could leverage, also offer a deferral of 20% with settlement with TCEQ
    • Proposing to get rid of deferral if the entity is already in position of getting referred to the AG’s Office
    • Proposing allowing counting more events for continuing violations (Table 8 in materials, pg. 15); these are maximums and allow TCEQ flexibility in dealing with continuing events
    • Asking that base penalty be increased by 20% in counties of 85k or greater
  • Looking to change 85k limit to 75k, would capture most of the counties where you have significant populations very near large industrial operations
  • Comm. Emily Lindley, TCEQ – Penalty amounts really don’t benefit the TCEQ, these largely go to GR; don’t want this construed as the agency somehow making more money
    • Baker – My understanding is that we do not benefit from these penalties, wasn’t part of the thinking in bringing this forward
  • Comm. Bobby Janecka, TCEQ – What aspects of the agency provide oversight for these changes
    • Baker – Commission is the check on the ED’s authority, anything on the enforcement docket will ultimately come before the Commission
    • Public will have opportunity to weigh in on the changes
    • If the Commission approves, we will move forward with press release, enter into 30-day comment period before bringing it back for final approval
    • Compliance history rule is where most concern lies, have to be very thoughtful with how we define the exigent circumstances that put an entity under this rule; if we’re careful we can bind future Commissions to follow appropriate procedure
  • Chair Niermann – Administrative penalties go into GR and this belongs to the legislature to allocate how they like, most of TCEQ is funded through fees
  • Comm. Lindley – That’s my understanding too, might be a tiny portion of administrative penalty that goes to the agency, but largely goes to the legislature
  • Comm. Lindley – Curious to know if this new policy was in place during the ITC or Chemco event what would’ve happened; likely need to push further back to other events to avoid pending litigation
    • Baker – Events of this size would still ultimately end up at the AG’s Office
    • Ultimate goal of penalty policy is to drive better maintenance and decision making, not necessarily to look at a new policy from the perspective of major events
    • Intent is to raise bar on penalties to drive better decision making and ultimately avoid events like ITC and Chemco
  • Comm. Lindley – Penalty policy affects entities of all sizes, curious to see how changes applied would look like
    • Baker – Can run simulations and get this data to you
  • Chair Niermann – Not aware of any small portion of administrative penalties that go to agency; sometimes allow penalties to be used for Supplemental Environmental Projects
    • TCEQ Staff – Penalties are deposited to GR, no small carve-out that we are aware of
    • Could be small exception for drycleaner remediation
  •  Chair Niermann – I frame this as opening flexibility so we are not under-penalizing
  • Comm. Janecka – I think running these simulations is a great idea; want to ensure we build restraints for the agency

 

Penalty Policy Overview

Bryan Sinclair, TCEQ

  • Updating applicability language in the intro
  • Proposing to remove references to civil penalties in the statutory authorizations section
  • Reorganize program types into alphabetical order for ease of searching
  • Changing statutory limits for aggregate production operations based on HB 907
  • Including drycleaner registration language
  • Changing major source throughput level from 50k/month to 100k/month; this change will catch the larger volume operators
  • Chair Niermann – Seems that market has redefined what a major source is, this seems designed to give mom & pop operators some relief
  • Comm. Lindley – Curious as to how we landed on the 100k number
    • Sinclair – Has been a discussion within OCE for some time, found that Murphy’s, Buccee’s, etc. tended to be the higher volume operations and were above this level
  • Comm. Lindley – Wants to ensure smaller operators would get penalized in the same way for environmental damage
    • Major sources would be subject to 100% of 100k max, minor sources are subject to 30% of 25k max; significant difference, each could be daily assessments
  • Proposing to increase penalties for Environmental, Property, and Human Health Matrix actual releases; for actual release major source we are already at the penalty limit, but would affect almost everything else
  • Increased penalties to Programmatic Penalty Matrix for Major category
  • In Determining Number of Violation Events, proposing changes in several categories that shift timing on Number of Events (Table 8, pg 15); first time this has changed since schedule was initially developed
  • In the deferral, violations in counties of 85k or more would receive a 20% penalty adjustment upwards; further looking to change this to 75k and up
  • Chair Niermann – How many counties does this include at the 75k and up level?
    • Have not counted number of regulated entities, somewhere around 45 to 50 counties in the state of Texas
  • Chair Niermann – Not convinced this is the best way to do it, can look at pollution events
  • Comm. Lindley – Have questions on how we came to this number, more than 90 percent of population would fall into 75k limit, but also have concerns over events that could occur in small counties; we would still deal with enforcement in smaller counties, but 20% increase wouldn’t be automatic
    • Baker – The way we’ve written this it’s for reportable emission events only, centered around air only
  • Changes to deferrals specifying that entities with two or more priori administrative penalty orders under the Water Code would not be eligible for 20% deferral
  • Comm. Lindley – My thought is the violations are in the same ‘media,’ e.g. two air violations and third air would get referred to AG; if it’s mixed, e.g. 2 water violations and one air, is this referred to the AG?
    • Sinclair – These are media specific, same process applies to Health & Safety Code
    • TCEQ Staff clarifies that this is two or more final administrative orders and is media-specific
  • Comm. Lindley – Has concerns over business with two violations that gets passed to the original owner’s children, subsequent finding of a third would refer this to the AG; want to ensure that there is enough discretion built in that we can account for these kinds of difficult situations
  • Comm. Niermann – It’s the AG’s discretion to prosecute, TCEQ provides input and in most cases will allow TCEQ to pursue administrative penalties instead of litigation; however, reading this the 20% enhancement looks to be automatic, often I think people game the owner/operator problem, but do understand the concern that the there is no flexibility in the 20%
  • Comm. Niermann – Inclined to put this out for comment
  • Comm. Janecka – I think this is fairly narrow, hope that ED staff has a good dialogue with the public on how this works out
  • Sinclair – Next steps are to put this out for public comment
  • Comm. Lindley – Goal is that we always want to ensure we treat those trying to comply different than repetitive bad actors
  • Commissioners discuss asking for rule proposals to be put out for public comment and brought back before the Commission by a certain date
    • TCEQ Staff says this would be challenging to get this done by the end of the year, press release would be scheduled for next week, public comment would run through October, and then prepare to bring it back in November
    • Depends on number of comments received and what they highlight
  • Comm. Janecka – Would like to get this done before the busy Session

 

Compliance History Rule Overview

Toby Baker, Executive Director TCEQ

  • Goal is to address the extreme events, highlights that under the current rule TPC is still satisfactory
  • Trying to determine flexibility needed to put entities involved in these events ‘under review,’ second portion is to determine what this means for these entities
  • TCEQ ED Staff believes statute allows the agency to create this new category
  • Also considering how entities would get out of this category
  • Asking Commissioners if there are any specific ideas they would like staff to contemplate if green light to move forward is given
  • Chair Niermann – Strongly in favor of moving forward with rulemaking on this; for some operations where there is an egregious impact it creates a mockery of compliance program, we need a way to review this and bring sanity back to the program
  • Chair Niermann – Two main areas of focus:
    • 1) Proposing to give ED a lot of new discretion and need to think about how to oversee this discretion, could consider discretion by event type & the more narrowly we define this the more likely we are to see downgrades
    • 2) What does ‘under review’ mean, what consequences are there, what is the timeline?
  • Chair Niermann – Have concerns about the due process, events due to no fault of the operators it seems like penalty trigger would be unclear
  • Comm. Lindley – Echoes the Chair’s concerns, large number of unknowns with definitions and criteria so anxious about what would be in the final rule; supports rulemaking, curious about timeline and needs to be very site-specific
    • Baker – Very focused on the gap in the rules, not looking to get into the structural and foundational aspects of the compliance rule; that would ultimately be a job for the legislature
    • Primary focus would be the extreme events mentioned earlier
  • Comm. Janecka – This would be a substantive new authority given to the ED, possibly necessary element of flexibility; potential for very negative policy impacts, should consider as this is discussed
  • Baker – All very important concerns, have heard the question of whether ‘under review’ should be a new category, or should it be a penalty box before being sent to previous category

 

Public Comment

Catherine Fraser, Environment Texas

  • Thanks TCEQ for proposed changes to penalty policy
  • Change is clearly needed, penalties were insignificant and air pollution
  • Increasing base penalties, counting more penalties, and 20% in counties of 85k are good steps
  • More needs to be done to solve noncompliance, urges additional steps to strengthen policy
  • Should ensure penalty always recovers full economic benefit, should consider mandatory penalties for unauthorized air pollution

 

Sam Gammage, Texas Chemical Council

  • Review of compliance history policy is warranted
  • No objections to currently proposed penalty changes, however do not think it is justified to compound base penalties for entities that happen to be in counties of 85k or 75k and higher
  • Have concerns about potential sanctions against facilities prior to a thorough investigation, could violate due process principles
  • TCC appreciates identifying triggers for determining when sites are under review; would recommend that TCEQ ensures it has authority to regulate based on these triggers and they are not under the authority of another agency
  • Would also suggest yearlong timeline for determining if an entity should be cleared of compliance history

 

Adrian Shelley, Public Citizen

  • TCEQ should look at its roll and look at how it can work with first responders
  • Suggests charging cost of response to the offending company
  • Would like to see mobile monitoring resources in the TCEQ LAR
  • Penalties need to serve as an economic deterrent, agree with revisions to matrices, could also penalize per violation
  • Questions if storage tank change could run against federal regulations

 

Closing Comments

  • Comm. Janecka – Discussion highlights how different TCEQ is to other agencies, how TCEQ follows up on permits and other issues is different; changes proposed are the first changes to penalty policy without some kind of legislative backstop
  • Comm. Janecka – Eager to hear from the public, have heard industry position that there is no deterrent factor and no one wants a release, etc.; eager to continue the conversation