TEXAS: An Introduction to Environment

Texas Environmental Law by Baker Botts’ Environmental, Safety and Incidental Response Section

Carbon Capture, Use and Storage in Texas: Poised to Launch

At-scale deployment of carbon capture, use and storage (“CCUS”) is poised to take off in Texas. Drivers include tax incentives; federal policy support; environmental, social, governance (ESG) imperatives; and the broader embrace of corporate carbon neutrality goals. Considerable effort and funding continue to be applied to the development of CCUS technology and projects, and of all the states, Texas has the greatest potential capacity for CO2 storage. Texas has an estimated capacity of 1,665 billion metric tons, over twice the projected capacity of Louisiana, the state with the second largest estimated capacity. While CCUS appears ready to launch, the permitting framework remains largely untested and thorny legal issues persist. Permitting and deployment of CCUS will require careful and strategic navigation of the legal framework while it is being tested and still evolving.

New State Law Regulating Tanks 

Historically, the regulation of tanks in Texas has been statutorily limited to Underground Storage Tanks (USTs). However, this past legislative session, Texas lawmakers enacted Senate Bill 900 which brings Above Ground Storage Tanks (ASTs) into the regulatory framework of the Texas Commission on Environmental Quality (TCEQ). On June 8, 2021, the Governor of Texas signed Senate Bill 900 directing the creation of the Performance Standards for Safety at Storage Vessels Program. The Program incorporates critical safety elements from federal statutes, regulations and national consensus standards to protect groundwater and surface water resources in the event of accidents and natural disasters. The TCEQ must adopt requirements for the design, construction, operation and maintenance of storage vessels by September 1, 2023. Owners and operators of a storage vessel must register with TCEQ and assess and report their current compliance status with the program by September 1, 2027. All owners or operators of new and existing storage vessels at petrochemical plants, petroleum refineries and bulk storage terminals will have to certify compliance with the Program by September 1, 2037.

CSB Investigation Procedure changes 

Texas owners and operators should be aware of recent developments at the US Chemical Safety and Hazard Investigation Board (CSB). The CSB has been heavily engaged in incident investigations in Texas in recent years and these activities reflect several recent trends. One trend is an expansion in the industries and types of accidents the CSB investigates. Traditionally, the CSB has focused predominantly on the chemical and refining industries. However, nationwide, the CSB has recently investigated incidents in a broader range of industries, including packaging, food processing, and upstream oil and gas operations. The CSB is also seeking to investigate more incidents. Last year the CSB issued a rule requiring companies to report certain types of accidental releases directly to the agency. Based on these reports, the CSB has begun performing office-based investigations. While investigators do not formally deploy during these investigations, the agency has issued document requests to better understand reported incidents.

NPDES Oil & Gas Delegation 

Given Texas’ status as the energy leader in the United States, the EPA’s January 2021 approval of the National Pollutant Discharge Elimination System (NPDES) permitting, compliance monitoring and enforcement for oil and gas discharges to the Texas Commission on Environmental Quality (TCEQ) is significant for streamlining discharge permitting for companies operating in Texas. Rather than a two-agency process, oil and gas discharge permits are now a one-stop shop with the TCEQ. House Bill 2771 (2019) transferred jurisdiction over these discharges from the Railroad Commission of Texas to TCEQ and required TCEQ to seek this delegation of authority from the EPA. While the TCEQ has been the delegated NPDES authority for municipal and industrial discharges since 1998 and has extensive experience with the NPDES program, there will be continued engagement with the agency in its implementation of the oil and gas discharge program.

Regulation of Plastic Material Discharges 

With increased focus on plastics pollution more broadly and a high-profile plastic pellet-related litigation and settlement with a chemical plant on the Texas coast, the TCEQ is poised to impose stringent requirements for discharges of pre-production plastic materials in its pending 2021 Texas Pollutant Discharge Elimination System Stormwater Multi-Sector General Permit (MSGP) and, potentially, in the triennial revisions to the Texas Surface Water Quality Standards (SWQS). The MSGP, as proposed, sets out new plastic-specific provisions requiring Best Management Practices to eliminate the discharge of plastic materials. The ultimate approach taken by Texas will affect numerous chemical plants. The MSGP is anticipated to become effective on August 14, 2021 and the SWQS is anticipated for proposal in the fall of 2021 with final issuance in early 2022. Navigating compliance will require advance preparation and familiarity with agency implementation of these new provisions. 

Keeping a Regulatory Watch on Emerging Contaminants 

National attention on the regulation of the chemical family known as per- and polyfluoroalkyl substances (PFAS), utilized in the production of products ranging from electronics to fire-fighting foam, has steadily increased, with all signs indicating there will be more and new requirements impacting entities. Public concern with these chemicals in the environment is leading to increased sampling, testing and reporting obligations for entities, as well as the need to take proactive steps to assess PFAS uses at various geographic locations, For example, this July, 172 PFAS were added to Toxic Release Inventory reporting, and the EPA has proposed soliciting data for 29 PFAS for the purposes of regulating PFAS drinking water systems. Since 2011, Texas has applied toxicity factors in its remediation program for 16 Perfluoro Compounds (PFCs) which are used in calculating risk-based values for soil, groundwater, sediment and fish tissue. It is anticipated that TCEQ’s values will be revisited in 2021. The regulation of PFAS will be far-reaching and necessitate rigorous programs by all entities to maintain compliance with these evolving mandates.

TCEQ Contested Case Hearing Development 

Texas is one of a handful of states that provides an opportunity for a trial-like, evidentiary “contested case hearing” before an administrative law judge on many types of environmental permit applications. These hearings are triggered by affected persons who make timely written hearing requests and, once granted, proceed as bench trials before the State Office of Administrative Hearings. As a result of these hearings, the administrative law judge recommends permit issuance or denial and produces findings of fact and conclusions of law that the Commissioners then adopt, revise, remand or reject. The Commission’s decision may be appealed to Travis County District Court. Because contested case hearings are both time- and resource-intensive, the Texas Legislature passed Senate Bill 709 (2015) which made the administrative record prima facie evidence that a draft permit should be issued. The 2015 statutory change was intended to address the “state’s ability to competitively attract business due to the uncertainty and expense created by the threat of a lengthy contested case hearing.” However, recent permit denials at TCEQ and reversals at the Travis County District Court demonstrate that the presumption afforded applicants in S.B. 709 proceedings, alone, does not replace the need for a robust administrative record.

In one recent S.B. 709 case, TCEQ commissioners remanded a permit for further evidentiary proceedings after the applicant’s modeling failed to demonstrate that the permit would comply with TCEQ’s rules. In another case, the Travis County District Court overturned a TCEQ permit issued after an S.B. 709 hearing, finding a lack of “substantial evidence” to support permit issuance. These decisions highlight the critical importance of developing a complete application and thorough evidentiary record both prior to and during a contested case hearing, even under the more streamlined S.B. 709 contested case hearing procedures.