The House Committee on Environmental Regulation interim report to the 88th Legislature covers TERP funds, Infrastructure Investment and Jobs Act funding, and federal regulation effect on industrial activities. For more information see the full report here.
Spotlight on Findings
Charge 2. Evaluate the allocation of TERP funds for effective air pollution reduction programs. Review which existing programs are over or undersubscribed and identify unrealized opportunities that would further program goals.
- Various recommendations for consideration were offered in testimony provided to the committee to improve TERP. These included the necessity of frequent reporting on the use of TERP funds by TxDOT. Others included allowing charging infrastructure to be included in grants for drayage and freight hauling equipment, increasing the purchase rebate to $4,000 for electric vans and pick-ups, lifting the 2,000 unit cap on EV rebates to a percentage of funds, and changing the electric vehicle rebate program to an incentive-based program.
Charge 3. Review recent passage of the Bipartisan Infrastructure Law (Infrastructure Investment and Jobs Act, Public Law No. 117-58), specifically funds that may bolster efforts to clean up polluted sites and plug wells and how federal funds can be used to complement state efforts on well plugging and pollution clean-up.
- The IIJA designated $4.7 billion in grant funding to states for well plugging only. In January, the RRC was informed it would be awarded $343.7 million. States have five to six years to expend or obligate the grant funds, which will be made available in phases. Phase 1 totals $107.6 million. An initial grant of $25.0 million will be made available in fiscal year 2023. The remaining $82.6 million is anticipated to be made available in fiscal year 2024.
- This brings total appropriations for oil and gas well plugging and site remediation up from $112 million to $137 million for the 2022-23 biennium. The RRC expects to plug 800 wells with this additional funding, bringing the total number of orphaned wells scheduled for plugging to 2,800 for the biennium.
- Texas has led the issue of well plugging for almost four decades. Started in 1984 with the formalization of the RRC’s well plugging program. The commission regularly exceeds performance targets. Operators are required by law to plug up to 10% of their inactive wells each year to maintain their licensed to operate. They also must engage in mechanical integrity tests to make sure those inactive wells are not leaking to subsurface. We are dealing with substantially older wells for plugging, those costs are high, but this is an opportunity.
- Of the $3.5 billion provided to the EPA by the IIJA for cleaning up Superfund sites, $1 billion has already been allocated to 49 sites across the nation, none of which are located in Texas. EPA Region 6 is in the process of identifying sites in Texas that could be eligible for the funds remaining for Superfund clean up. Importantly, Texas will not be required to pay the 10% cost share when IIJA funding is used as is required for all other funds used for Superfund cleanup. The IIJA also directed $1.5 billion to the EPA for existing Brownfield cleanup programs. TCEQ currently receives $500,000 per year for Brownfield cleanups and will identify additional needs that could be met with this new funding.
Charge 4. Monitor newly adopted and proposed federal regulations that could directly impact economic development, manufacturing, and industrial activities that fall within the jurisdiction of the committee, including regulations adopted or proposed by the Environmental Protection Agency.
- The EPA previously found the Permian Basin in compliance with NAAQS for ozone less than 5 years ago. The EPA’s proposed action to redesignate portions of the Permian Basin in Texas as nonattainment is not supported by data collected from air monitories in Texas, but rather monitors located in New Mexico. The proposed action is also discretionary, not required by any existing rule or law. By deeming this proposal “nonsignificant”, the EPA can expedite its final decision and avoid a review of how the proposal would impact jobs and the Texas economy.
- Letters written by Governor Abbott, Comptroller Hegar, and members of the Texas House of Representatives outline concerns with the EPA’s process and call into question the motivation for the proposed action to redesignate the Texas Permian Basin.
- If the EPA’s actions result in as little as a 10% reduction in oil and gas production in Texas, that could lead to a loss of more than 40,000 jobs statewide, 60% of which would be in West Texas. This would cause Texas gross domestic product to be reduced by $13 billion and would have a significant negative impact on the state budget — 5% of which is funded by oil and natural gas production taxes.
- Furthermore, if the EPA decides to lower the ozone standard from 70 ppb to 65 ppb, it would impact every sector of the Texas economy and could lead to a 13% increase in the price of retail gasoline and shrink output for the Texas agriculture industry by 8.7%. While the 65 ppb would be a national ozone standard, it would disproportionally impact the Texas economy because of the significant compliance cost borne directly by Texas companies.
