Brian Christian Consulting

If there is one certainty around any session of the Texas Legislature it is to expect the unexpected.  A cliché?  Yes, but it would not be if it were not true.

To my point, going into the 2019 Session, things were relatively stable, the coffers were full, and the Legislature was all about focus on bread-and-butter issues.  No one foresaw, however, that several large industrial fires, one of which prompted a multi-day shutdown of the Houston Ship Channel, would disrupt what to that point had been a quiet session.  The outcome included special hearings, multiple calls for tighter regulation, and an interim charge to study the construction, operation, and regulation of above-ground storage tanks used by the petrochemical industry.  COVID wiped out interim hearings, and the issue, while lingering, seems to have less juice at the moment (though, to be a broken record, just wait for Sunset).

Now, an unexpected new event may result in an even bigger disruption of a Session that was already trying to stay focused on a relative handful of issues.

A Shutdown of Another Sort.

OK, the weather is never entirely unexpected.  In fact, it can resemble a slow-motion train wreck that you cannot escape.  I mean unexpected in the sense that the Legislature was not planning to have to deal with the fallout from a massive weather event, the effects of which will continue to unfold even after temperatures rise above freezing.

Let us recap briefly.  Late in January, the Climate Prediction Center forecast that a few weeks in February would be well-below normal for temperatures in Texas.  Local forecasts bore that out to an extent, showing colder temperatures than we had seen for most of January.  On February 8^th, a friend told me he had seen forecasts that temperatures in Central Texas would hit the single digits the week of the 15^th.  When I went to check my local news station, however, it was still showing highs in the 20s for a few days.  Despite that disconnect early in the week, meteorologists fairly quickly started sounding the alarm that we were in for a once-in-a-generation winter weather event.

From what we know as I write this, the state’s power system began implementing their contingency plans.  The major players—the Electric Reliability Council of Texas (ERCOT), the Public Utility Commission of Texas (PUC), the Railroad Commission, and the various electric generating and natural gas utilities were no doubt in communication with their respective constituencies and gearing up their responses.

Well, the best laid plans.  Again, based on what we know now, and not pointing any fingers, the system still got overloaded.  Millions went without power, and there are cascading impacts to water supply, water treatment, and residential gas delivery.  Good, smart people are going to be sorting this out for a long-time, and it is not my place or intent to opine on cause, effect, missed opportunities, or lax anything.  Though, if I were advising anyone working on this (and I am not), I would suggest getting those after action reports out much sooner rather than later.

I do think the contours of the Legislature’s response, immediate and further downrange, are already visible.

To start, House Energy Resources and House State Affairs will be holding a joint hearing on February 25^th to discuss the state response.  No doubt testing participants’ abilities to be in two places at once, Senate Business & Commerce is meeting at the same time on the same issue.  The hearings will feature invited testimony only.  These hearings will provide a forum to sort through the order of events and, hopefully, bring sorely needed clarity to who does what in a situation like this.  For example, where does ERCOT’s authority begin and end, and when is the baton passed to the providers?

We can also already see some emerging issues the Legislature just might go ahead and address now.  For example, the media and others have pointed out the make-up of ERCOT’s governing board, so I would not be surprised to see legislation to require all of its members to be Texas residents.  Transparency has also been an issue, so perhaps enhanced notice requirements could be in the offing.

There is, however, a very limited amount of time remaining.  Filing deadline, March 12^th, is but a few weeks off, and to call this issue complicated is an understatement.  Consequently, the Legislature will not have time to develop sweeping reforms this go round.  The simple fact is that energy generation, management, distribution, and regulation is diffuse, with several state agencies and multiple utilities all in the mix.  ERCOT represents the wire physicists, making sure the system can carry loads and balancing supply and demand.  But from what I can tell, they have no oversight when it comes to how electric generators and gas pipelines implement their contingencies and manage their businesses.  It will, then, take time to evaluate these issues holistically.

By the way, the state did make an attempt at developing a single energy plan, back in 1992.  The State of Texas Energy Policy Partnership, however, never quite got across the finish line.  The status quo often benefits the affected regulated entities.  We will see what the appetite is moving forward.

At the very least we can expect an interim study, either by joint standing committees, or by a special committee.  The latter is foreseeable because of the sheer number of legislators whose constituents have been affected, and many of them might want a crack at this issue.

Again to be a broken record, the Sunset Review process could come into play.  Right now, the PUC and ERCOT are up for Sunset Review during the 2024-2025 Review Cycle.  Could that review be moved up to the 2022-2023 cycle?  Further, if they do move it, and assuming they do not swap out other large agencies such as the Texas Commission on Environmental Quality (TCEQ), could it provide an opportunity for an even wider review of cross-cutting jurisdictional issues?  For example, there is no doubt in my mind that the environmental NGOs and the media will take the opportunity presented by this crisis to bring up maintenance, start-up, and shutdown emissions, as well as emissions events.  And, remember, TCEQ and PUC/ERCOT were both reviewed during the 2010-2011 cycle, and their respective bills overlapped on public water supply duties.  So, like I say—watch that Sunset Safety Net Bill.

Meanwhile, Back to the Filed Bills.

When I wrote my first dispatch, there had not been too many environmental bills filed.  This week, we have a few more to highlight (this time with links).

We are starting to see Texas Emissions Reduction Plan (TERP) bills.  Senate Bill 622 (Gutierrez) would expand the use of the New Technology Grant funding to cover technologies to reduce flaring.  The funding would come from reducing the allocation to the Texas Clean Fleet Program.  House Bill 1533 (Reynolds) would create an energy efficiency loan guarantee program under the program.  These join House Bill 286 (Cortez), which would exempt certain transportation authorities that receive alternative fueling station grants from the requirement to make such facilities available to the public.

Bills to drill into TCEQ’s operations are also starting to appear.  House Bill 1820 (Zwiener) would make numerous changes to TCEQ’s enforcement and penalty policies and includes direction for permitting emissions events.  House Bill 1912 (Wilson) would expand TCEQ’s permitting authority over concrete batch plants and aggregate production operations to encompass noise and light pollution, and to require fence line monitoring.

In waste world, House Bill 1947 (Ordaz Perez) would enhance notice for medical waste facilities, require TCEQ to reject an application if the person does not meet the notice requirements, and establish a buffer of 500 feet from the facility boundary to residences, etc.

Things are also developing in water world.  Senate Bill 531 (Kolkhorst) would allow the Water Infrastructure Fund to be used to make transfers to the Financial Assistance Account of the Texas Water Development Fund II (House Bill 1904 by Crockett is the companion).  Senate Bill 673 (Buckingham) would require the Texas Water Development Board to provide technical assistance to the Interregional Planning Council created by House Bill 807 in 2019.  Finally, catching up to a bill filed before my first dispatch, Senate Bill 601 (Perry) would establish the Texas Produced Water Consortium.  Hosted by Texas Tech, the consortium would include the Railroad Commission, TCEQ, the Texas Water Development Board and is constituted to study the beneficial uses of produced water.

What About Committees?

Well, another bit of fall-out from the winter storm is that both money committees lost a week of hearings.  Appropriations will meet twice the week of February 22^nd.  Finance has scheduled themselves out through March 2^nd.  As I write this, the major focus will be Health and Human Services and Education.  In a normal session, the other committees would have also lost some ground this week, but during a COVID session they were expected to start a little later anyway.

On February 18th, Appropriations Chair Bonnen also announced the budget bill article subcommittees. Article VI (Natural Resources) will be comprised of Walle (Chair), Bell, Thompson, Toth, and Dominguez. That process should really start to gain steam now.

I hope you have found this update helpful.  I really appreciate the positive feedback I received on the first dispatch a few weeks ago.  Take care everyone, and I will try to keep you posted!

xxx