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Public Citizen’s Recap of the 88th Texas Legislative Session

By Adrian Shelley

The latest regular session of the Texas Legislature concluded on May 29. Let’s look back on the session’s 140 days on what they mean for environment, energy and ethics in Texas.

Years of Misconduct Catch up to Ken Paxton

We begin with an item that wasn’t on our agenda–or anyone’s–at the start of the legislative session. Attorney General Ken Paxton has brought shame and disgrace to his office, from his indictment for felony securities fraud to his pushing conspiracy theories in the 2020 presidential election. Paxton drew the ire of the House of Representatives in March when he asked the Legislature to pay a $3.3 million settlement of whistleblower lawsuit alleging widespread corruption.

Public Citizen ran a petition against taxpayer funding of the settlement that many of you signed. It turned out to be unnecessary. State lawmakers wrote the state budget to explicitly forbid paying the settlement. We contend that doing otherwise is unconstitutional.

The House then took a long overdue step: an investigation that culminated in Paxton’s impeachment. The 20 articles of impeachment were overwhelmingly approved by 121 of the 150 House members. Public Citizen was among the first organizations to call for public accountability. Now we await Paxton’s trial in the Senate, where we have called for his wife, Sen. Angela Paxton, to recuse herself. The trial may not begin until August, but we hope the Senate will finally hold Paxton accountable.

Texas Commission on Environmental Quality, a “Reluctant Regulator,” Gets Modest Reform

The Legislature never showed an appetite for major reform of the TCEQ, which we see as a fundamentally broken agency that the Sunset Advisory Commission labeled a “reluctant regulator.” That said, we are happy with the modest reforms in the TCEQ Sunset bill, SB 1397. The bill includes increasing the daily maximum fine for the worst pollution incidents. But the conditions to use the new $40,000 maximum are narrow, and TCEQ has shown little appetite to levy maximum penalties against polluters.

SB 1397 expands opportunities for public participation. Residents will have 36 extra hours after certain public meetings (about a dozen a year, or half of all permit meetings) to make public comments and request contested case hearings. Notices of permit applications and draft permits will now be posted online, making them easier to access by the public. Finally, a new community outreached program was established to provide information to people who wish to participate in the TCEQ permitting process.

Updates to the compliance history system should let the TCEQ more quickly revise a rating after a major incident. This change was precipitated by the 2019 explosion and fire at the ITC facility in Deer Park, which maintained a “satisfactory” compliance rating a year after the incident.

The bill also includes a new mandate for TCEQ to periodically review environmental flow standards, which ensure our waterways have enough water to maintain healthy and resilient ecosystems. Texas environmental flow standards had become outdated without regular reviews and revisions. A new advisory group should ensure that this does not happen again.

Much is left to be done to improve the TCEQ’s functions. Fundamental would have seen action on cumulative impacts in permitting (such as that proposed by Sen. Borris Miles in SB 179) and environmental justice (HB 4785 by Rep. Rafael Anchia and HB 642 by Rep. Ron Reynolds).

Another bright spot would have been SB 813 by Sen. Miles. If not for Gov. Abbott’s veto, the legislation would have provided notice of TCEQ fines and other enforcement actions to lawmakers who chose to receive it. Informing elected officials when companies in their districts break the law could have helped them apply pressure to bring those violators in line.

We also celebrate the failure of SB 624, which attempted to weaponize environmental regulations against wind and solar energy projects. While we generally favor rules to protect public health and welfare, this bill baldly singled out wind and solar energy for onerous regulations that would have made new projects virtually impossible. We would remind lawmakers that while some people may find wind turbines or solar panels unsightly, fossil fuel burning kills 17,000 Texans yearly.

SB 471 is lamentable. This bill allows TCEQ to ignore certain complaints, especially those from residents who have filed multiple complaints in the past. Proponents of the bill claimed that “vexatious” complainants were sapping resources – the TCEQ itself denied it. There are excellent reasons that someone might complain about a facility repeatedly, mainly that TCEQ didn’t fix the problem. We hope the agency ignores this bill and continues to investigate all complaints and remedy every environmental violation.

Mixed Results on Fixing the Grid, and Public Utility Commission Sunset

While the worst energy bills failed this session, many important proposals also died, and lawmakers cannot seriously claim to have “fixed the grid.” SB 6, which would have forced taxpayers to pay up to $18 billion for new state-owned fracked gas plants, failed. But a smaller version of this plan, SB 2627 and SJR 93, passed and will provide low-interest loans and “completion bonuses” to private builders of new gas plants.

SB 7 by Rep. Todd Hunter was passed to provide certain tools that PUC and ERCOT will use to stabilize the grid. Notably, the bill caps at $1 billion per year a new program to provide additional payments to fossil fuel energy generators. Although we don’t support these payments, we concede that the cap is much better than the $9 billion the program could have cost if implemented without restraint.

On the demand side, Texans got two good bills. SB 2453 by Sen. José Menendez allows the State Energy Conservation Office to update building codes to improve efficiency. SB 1699 by Sen. Nathan Johnson concerns distributed energy resources and residential demand response. Each of these measures will go a small way toward using Texas’ energy resources more efficiently.

Several commonsense energy efficiency bills failed: SB 258 by Sen. Sarah Eckhardt (setting a new target for energy efficiency) and HB 4811 by Rep. Anchia (creating the Texas Energy Efficiency Council). The failures area absurd, as no one debates that reducing energy use through efficiency is the cheapest solution to stabilize our grid. The failure of these bills means one thing: most lawmakers would rather protect energy company profits than lower your bills and stabilize your grid.

Like the TCEQ Sunset bill, the PUC Sunset bill, HB 1500, gave us modest reforms of the agency we supported. The bill included more transparency, public communication, and opportunities for public engagement. The bill also makes improvements to the structures of PUC and ERCOT (following up on similar reforms in SB 3 from the last session, which passed in the months after Winter Storm Uri). Some changes to the energy market should help stabilize the grid, and further studies of this and related issues.

We have been vocal in our criticisms of cryptocurrency mining industry’s impact on the grid. We are sorry to report that SB 1751 by Sen. Lois Kolkhorst, which would have required crypto miners to register with ERCOT and provide some modest limits on their participation in grid-stability programs, did not progress in the House after passing the Senate. We hope this legislation will find a House champion next session.

Finally, we must give immense credit to Cyrus Reed with the Sierra Club for his tireless efforts to improve our new energy laws. No one is working as hard for Texans on energy policy as Cyrus.

Corporate Welfare is Revived, But Without Renewables

The massive corporate welfare program previously known as “Chapter 313” is back in the form of HB 5. This program allows school districts to offer tax breaks to manufacturing projects that site within their borders. The state pays back the lost revenue from these deals, meaning that HB 5 is a taxpayer-funded subsidy of corporations in Texas.

We never supported Chapter 313 or HB 5, but we have to point out that the new version of the program is even worse than before because it deliberately excluded wind and solar energy projects. Bizarrely, the program focuses on new energy generation projects, even though those projects have to be located in Texas anyway to connect to our statewide grid.

HB 5 does include new public participation requirements, which will allow people in the school districts considering a corporate handout to voice their concerns. Still, Texas would have been better off leaving this program in the past.

A Severe Blow to Local Control

Texas continued its hypocritical attacks on the local authority of cities and counties. HB 2127 is a sweeping new preemption bill that will prevent cities and counties from passing new laws in nine broad areas of state law: Agriculture, Business & Commerce, Finance, Insurance, Labor, Local Government, Natural Resources, Occupations, and Property. The bill includes carve-outs for certain hotly contested areas of local regulation: animal businesses (puppy mills), payday lenders, and massage parlors. The bill also allows almost anyone to sue a local government if they believe a local ordinance has negatively impacted them. Cities and counties will have to expend scarce resources (your local tax dollars) to defend against such lawsuits.

Many opponents of HB 2127 believe it is unconstitutional, as it upends more than a century of established law and practice concerning cities’ operations. We hope one or more cities will challenge its constitutionality in the courts.

Clean Vehicle Funding in TERP goes to Hydrogen Energy Projects

The Texas Emissions Reduction Plan (TERP) is a program to reduce air pollution from vehicles by funding the retrofit or replacement of old, polluting engines. TERP is one of the most effective programs in Texas to reduce the air pollution that affects our health and keeps us from meeting federal Clean Air Act standards for ozone.

The state budget now mandates that the financial report on TERP include a direct cost comparison of TERP funds used by TCEQ to those used by the Texas Department of Transportation. TxDOT ngets $81 million a year of TERP funding. Still, its use of the funds to reduce congestion by building new highways (which doesn’t work) is 248 times more expensive than TERP’s best program, the Diesel Emissions Reduction Incentive (DERI) program. Perhaps with this side-by-side cost comparison, lawmakers will see their way to returning these air pollution reduction funds to TCEQ, where they belong.

Rep. Brooks Landgraf, chair of the House Environmental Regulation Committee, typically sponsors bills regarding TERP. This year he passed HB 4885, which created a new program within TERP for hydrogen energy projects. Public Citizen supports so-called “green” hydrogen, which uses clean energy as its input and does not create pollution. Unfortunately, the new TERP program is not limited to green hydrogen and could fund projects using natural gas or coal. Vehicles can either use hydrogen in fuel cells, which do not pollute, or in a combustion engine, which does. HB 4885 allows either use.

We supported another change in HB 4885 to reduce funding for the underused natural gas vehicle program. We opposed a reduction in funding for the light-duty vehicle program, which already doesn’t meet the demand for new passenger electric vehicles. We would have preferred to increase the cap for EVs eligible for a TERP rebate from 2,000 to 3,000 or even 4,000 vehicles.

HB 4885 also included a slight increase in funding to a program that will quantify pollution reductions achieved through energy efficiency and building code updates. The resulting bill is mixed, with items we supported and opposed.

No Meaningful Reform of the Concrete and Aggregate Industry

We are happy to report that SB 1399 by Sen. Charles Schwertner was passed. SB 1399 requires a new protectiveness review of each concrete batch plant permit every six years. Previously, permits authorized a facility for ten years. The TCEQ Sunset bill, SB 1397, also mandates developing best management practices for aggregate production operations. This is a positive, though we should note that the practices are explicitly unenforceable by law and that TCEQ was already directed to develop these practices last session and did not.

Unfortunately, many worthy bills relating to the concrete and aggregates industries that have been filed for several sessions again failed. These include HB 406 by Rep. Nicole Collier (allowing schools, places of worship, day-cares, hospitals, and medical facilities to request a contested case hearing), HB 2392 by Rep. Senfronia Thompson (giving Houston and Harris County authority to deny a concrete batch plant permit), and HB 94 by Rep. Jarvis Johnson (allowing the executive director of the TCEQ to consider local impacts when approving a concrete batch plant permit).

Although this industry saw modest reform, concrete and aggregate bills will remain a priority for Public Citizen in future sessions. Texans have waited too long for the Legislature to get control of this industry.

Status Quo for the Oil and Gas Industry

Texas continued its backward slide away from sensible oil and gas industry regulation. HB 33 explicitly forbids Texas regulators from enforcing federal laws related to the oil and gas industry. This bill is likely to undermine the state and federal cooperation essential to public health laws such as the Clean Air Act. The legislature also passed SB 1017, preventing cities from regulating specific energy sources or engines. SB 1017 was widely understood to target Dallas’ proposed ordinance to ban gas-powered lawn equipment, which can produce as much air pollution as a passenger car.

On the bright side, HB 4256 by Rep. Andrew Murr passed. This bill will help address leaks from certain oil and gas wells converted into water wells.

Several bills promoting carbon capture and storage technology died. We won’t miss HB 1158/SB 2243 (TERP funds and tax exemptions for CCS), SB 2107 (defining power space ownership and transferring liability for CCS wells after ten years), or HB 4557 (narrowing claims for damages caused by CCS). We were disappointed that two bills related to decommissioning and plugging wells failed: HB 3839 and HB 3840 by Rep. Vikki Goodwin.

Texas Prevents Insurers from Doing Their Job

ESG stands for “environment, social, and governance,” shorthand for policies that companies around the world are adopting as a commitment to good governance and social responsibility. Texas has taken a contrary stance, trying to pass legislation preventing companies from enacting “woke” policies. Several anti-ESG bills failed this session, including SB 1060 (banning ESG proposals by shareholders in insurance companies), HB 2752 (barring the Texas Department of Insurance from adopting ESG rules), and HB 2977 (preventing TxDOT from using ESG criteria when awarding contracts).

One anti-ESG bill passed. SB 833 bans insurance companies doing business in Texas from using ESG criteria in setting rates. This bill is widely understood to prevent insurers from considering climate change risks when writing insurance policies. It is also understood to protect oil and gas companies from confronting their role in exacerbating climate change. We believe this is a dangerous restraint on insurers. Insurance companies price risk – that is their job. If an insurance company believes (like we do) that a hurricane on the Texas Gulf Coast is more likely due to climate change, shouldn’t that company charge more to insure an oil refinery on the coast? With SB 833 headed to the governor, it is unclear what impact this will have on Texas insurers.

Shelley is the Texas director of Public Citizen