Texas companies may soon see increasing penalties for noncompliance with Texas environmental laws. On September 30, 2020, the Texas Commission on Environmental Quality (TCEQ) announced significant proposed changes to the existing Penalty Policy (the Policy), which was last revised on April 1, 2014. TCEQ is accepting comments on the revised Policy until October 30, 2020. Received comments will be summarized and presented to the Commissioners for their consideration at future Commissioners’ Work Sessions. For additional explanation of the proposed revisions, or for assistance in preparing comments to the TCEQ, please contact Foley & Lardner LLP.1
TCEQ also announced that it is beginning the rulemaking process to propose revisions to 30 Texas Administrative Code (TAC), Chapter 60, Compliance History, by adding a new section, which will allow TCEQ to reclassify a site’s compliance history classification to “under review” if the site has caused, suffered, allowed, or permitted the creation of exigent circumstances, such as a major explosion or fire that impacts the surrounding community and environment. TCEQ has not yet released the fully proposed Compliance History rule, but when it does, a public hearing will be held during the 30-day public comment period. Compliance History Classification is a factor considered under the Policy, and may be used to increase or decrease a penalty, depending on the classification.
In introducing the stricter Policy, TCEQ pointed to statutory changes that have occurred since 2014, as well as the increased demand for environmental accountability caused by recent disasters. Most significantly, TCEQ has proposed changes to penalty calculations to increase assessed penalties, with the goal of deterring future noncompliance. To accomplish this, TCEQ has increased the percentages of the maximum statutory penalty applicable to certain types of violations.
Specifically, percentages for actual releases in the Environmental, Property and Human Health Matrix have been increased across the board, and percentages for Major Violations in the Programmatic Penalty Matrix have also been increased. Additionally, under the proposed Policy, TCEQ may now increase the number of violation events for continuous violations. Together, these changes will result in increased maximum assessed penalties, because the increased base penalty may be multiplied by the increased number of violation events to arrive at a higher Subtotal 1 Total Base Penalty.
1 TCEQ announcement is available at: https://www.tceq.texas.gov/news/releases/tceq-opens-public-comment-period-on-revised-penalty-policy-proposal-and-begins-compliance-history-rulemaking-1.