Texas Commission on Environmental Quality Implements Changes to Compliance History Rules | Pillsbury Winthrop Shaw Pittman LLP

Currently, TCEQ annually calculates a compliance history score for regulated entities based on the preceding five years. The current classifications are unsatisfactory, satisfactory or high performers—or unclassified if no compliance information is available for the site. But annual compliance history calculations may not timely reflect emergency events.

The new rule, to be included under 30 Texas Administrative Code Chapter 60, gives the ED the power to immediately designate the site’s compliance history classification as “under review” in the wake of an emergency event. The ED can then reclassify the history as “suspended” between 30 and 90 days from the “under review” designation. A “suspended” designation can be assigned if the ED determines that “exigent circumstances” exist due to the occurrence of a significant emergency event such as a major explosion or fire. Such circumstances include:

  • An event that significantly impacts the surrounding community and environment;
  • An event that causes emergency response efforts by federal or state authorities to address pollutants, contaminants, or other materials regulated by the respective agency; and
  • An event that results in certain urgent or grave consequences.

A “suspended” designation means that that site would be treated as an “unsatisfactory performer” for purposes of relevant agency decisions and would remain in place for a minimum of one and maximum of three years. This rule outlines an appeals process by motion for TCEQ review.

TCEQ’s reasoning for the rulemaking is that “several large emergency incidents at industrial facilities in the past few years have caused significant impacts to public health and the environment, which have resulted in scrutiny of the compliance histories of the regulated entities involved in these incidents.”

This rulemaking could have a significant impact on facilities that experience emergency incidents, subjecting them to increased scrutiny from the agency. A designation of “suspended” or “unsatisfactory performer” could lead to harsher enforcement by the TCEQ, additional oversight on environmental compliance, and a potential for increased administrative penalties. The proposed rules note, however, that TCEQ does not intend for reclassification to change underlying compliance history numerical points associated with the site.

The rule could also impact facilities beyond the subject emergency event. (See 30 TAC § 60.3(a)(3)(B)(i), authorizing the agency’s use of compliance histories in regulatory actions). Additionally, TCEQ can perform investigations without prior notice at “unsatisfactory performer” sites and may require additional environmental compliance reporting. This designation also has the potential to negatively affect a facility’s permitting activities, which are subject to compliance history reviews. Therefore, pending applications or those submitted during the period in which the facility is designated as “suspended” or “unsatisfactory performer,” be it for issuance, renewal, modification, or amendment, could be affected.

The rule was published in the December 31, 2021, issue of the Texas Register at 46 Tex. Reg. 9183. The TCEQ scheduled a virtual public hearing on the proposed rule for January 27, 2022, and written comments were accepted until February 1, 2022. While the proposed rule was met with an overall appreciation and TCEQ was lauded for undertaking the task, there remain several concerning several aspects of the rule.

Many submitted comments recommending that TCEQ exclude from consideration extreme weather events and that the regulated entities should have the opportunity to demonstrate that any event or exigent circumstances at issue arose because of a natural disaster, extreme weather, or catastrophic event that was unavoidable. TCEQ clarified that such extreme weather conditions will not trigger an under-review designation and that the proposed rule is only relevant if caused by an actual, unauthorized release of pollutants, contaminants, or other materials regulated by the agency. Further, TCEQ will continue to encourage regulated entities to provide context and information to the ED to demonstrate how or why a significant event should be attributed to unavoidable causes.

TCEQ declined a proposed modification to allow regulated entities the opportunity to provide information to the ED about an emergency event and any resulting exigent circumstances prior to any initial under-review designation occurs. Rather, it is encouraged for such demonstrations to be made at any time prior to the filing of a motion for TCEQ review, which could immediately follow the event or prior to the under-review designation. TCEQ viewed the requested modification as a potential procedural delay of under-review designations. Allowing the ED to immediately designate a site’s compliance history classification as under-review allows for immediate notice to both the public and agency staff of a qualifying significant event at the site that warrants review.

As an alternative to the proposed rule, it was requested that TCEQ consider using the traditional compliance history scoring and classification system but by taking it outside the annual process as needed, to avoid the creation of an entirely new process. TCEQ denied the request, stating that utilizing the traditional compliance history scoring and classification system is not an option. The system is dependent on the existence of compliance history components, and if such a component is a final enforcement order or court judgment, the component may not exist for months or years after the exigent circumstances, leaving the site’s compliance history unaffected. The rule closes this temporal gap by immediately designating a site as under review and allows for reclassification, if warranted. TCEQ modified the temporal limit on the ED’s authority to designate a site’s compliance history classification as under review to occur no later than 90 days from the start of the exigent circumstances.

Although no modifications were made, many comments requested clarification on the definition of “significant community disruption” and “active emergency response” needed by federal or state authorities. TCEQ stated that what qualifies as a “significant community disruption” will be determined on a case-by-case basis, involving an assessment of the impact to local, surrounding communities. TCEQ indicated that it does not want to unintentionally limit whether community disruptions can be considered as resulting from the site’s event by accepting the modification.

Some regulated entities were concerned that the evacuations were qualified to exclude evacuations from sites where the emergency events occur because those sites often conduct partial or complete evacuations out of caution and requested for the evacuations to be limited to “off-site” places of employment. TCEQ approved the modification to make the distinction between any evacuation and evacuation of off-site persons.

Several commenters were concerned about the inclusion of “shelters in place” as a condition to the proposed rule, stating that it could discourage regulated entities from issuing them when there is only a potential risk of exposure to a community because of a minor incident. They further requested that if it does remain a criterion to define exigent circumstances, that the shelter in place be restricted to exclude sites where the emergency events occurred and limited by a minimum timeframe. While TCEQ denied the minimum time limit, TCEQ did modify to qualify relevant sheltering in place to off-site persons, which will be different than those that occur onsite without significant community impact.

Requests were made for modification of the period for the ED to decide whether to issue a Note of Decision to Reclassify, after already designating the under-review classification, until 90 days after the designation. TCEQ denied the modification and opted to maintain the originally proposed period of the Notice of Decision to Reclassify to occur no sooner than 30 days and not later than 90 days after the under-review designation. This is, according to TCEQ, to ensure that the compliance history program provides a better and more accurate measure of such sites’ performance in light of significant events and makes it a more effective tool to provide oversight and regulatory consistency.

Lastly, commenters were concerned that sites reclassified to suspended may be subject to various restrictions for the duration of the reclassification, such as continued permit review requirements, restrictions on the ability to obtain or renew a flexible permit, or authorization to discharge under a general permit. To address these concerns, TCEQ modified the proposed rule to allow the site owner or operator of any reclassified or suspended site to demonstrate to the ED that such authorizations should be made or kept available. This gives the ED discretion to determine the sufficiency of the demonstration to justify the authorizations be kept available.

TCEQ adopted the proposed rule on June 1, 2022, during the Commissioners’ meeting, and it will be effective starting June 23, 2022.