The Nickel Report

On December 15, 2021, the Texas Commission on Environmental Quality (TCEQ) approved the publication of proposed changes to its compliance history rules to allow the agency to reclassify a site’s compliance history classification if an emergency incident results in significant impacts to the public and the environment.[1] In describing the background and reasons for the rulemaking, the agency noted the occurrence of a number of emergency incidents at industrial facilities in the state and resulting scrutiny of the facilities involved in those incidents. The proposed rulemaking is intended to “communicate to the regulated entity and the public that a review of such a site’s performance is underway, provide a more immediate and accurate measure of a site’s performance in light of such an event, and make compliance history a more effective tool to provide oversight and ensure regulatory consistency.”[2] If the rules are adopted as proposed, facilities involved in significant emergency incidents would face heightened regulatory scrutiny in agency decisions.

TCEQ currently calculates compliance history scores annually for covered regulated entities based on a five-year look back period and classifies sites as unsatisfactory, satisfactory, or high performers, or as unclassified if no compliance information is available for the site.[3] The agency is authorized to take compliance history classification into consideration in its regulatory decisions including those related to permitting and enforcement matters. For example, if a site is classified as an unsatisfactory performer, the agency may deny or amend a solid waste management permit.[4] Because compliance history scores are calculated annually, however, it is possible that, under the current compliance history rule framework, a site’s compliance history classification may not accurately or promptly take into account the occurrence of the emergency incident.

Under the proposed rulemaking, a process would be established for TCEQ’s executive director to initially designate a site’s compliance history classification as “under review” and subsequently reclassify it to “suspended” if the executive director determines that “exigent circumstances” exist due to the occurrence of a significant emergency event such as a major explosion or fire. “Exigent circumstances” would be determined based on the existence of significant community disruption, emergency response by a federal or state authority to address an actual, unauthorized release and certain other consequences (such as the issuance of an emergency order or temporary injunction or evacuation of persons from their homes or other locations).[5] Upon such determination, the “under review” designation would be effective immediately and the site owner and operator would be notified of this first step in the reclassification process.[6] As a second step in the process and no later than 90 days after a site’s classification as “under review,” TCEQ’s executive director would then determine, after consideration of available information concerning whether the incident was caused through any fault of the site’s owner or operator, whether a “suspended” classification was warranted and if so determined, would provide notice of the reclassification.[7] If a site was reclassified to “suspended” status, then the site would be treated as an unsatisfactory performer for purposes of relevant agency decisions.[8] A site’s reclassification to “suspended” status would remain for at least one year but potentially up to three years.

TCEQ has scheduled a virtual public hearing to be held on January 27, 2022. The agency will also be accepting written public comments until February 1, 2022. Additional details may be found at TCEQ’s website at https://www.tceq.texas.gov/rules/prop.html. For more information about these developments, please contact Lydia González Gromatzky at lydiagromatzky@huntonak.com.

[1] See TCEQ Commission Agenda Meeting, December 15, 2021, item 38, Docket No. 2020-1173-RUL, (may be accessed via webcast at https://www.youtube.com/watch?v=RNSFUI0FFW8S.)

[2] See TCEQ proposed rules, Chapter 60 – Compliance History, Rule Project No. 2020-049-060-CE available at https://www.tceq.texas.gov/assets/public/legal/rules/rule_lib/proposals/20049060_pro.pdf.

[3] See 30 Texas Admin. Code (TAC) § 60.2.

[4] See 30 TAC § 60.3(a)(3)(B)(i).

[5] See proposed new TCEQ rule at 30 TAC § 60.4(a).

[6] Id.

[7] See proposed new TCEQ rule at 30 TAC § 60.4(b).  The proposed rules also include procedures for reconsideration or review of the executive director’s reclassification to “suspended” status. See proposed new TCEQ rule at 30 TAC § 60.4(d)-(e).

[8] See proposed new TCEQ rule at 30 TAC § 60.4(g)(2).