Agency Highlights

United States Environmental Protection Agency (“EPA”)

Lee Zeldin Confirmed as EPA Administrator; Scott Mason IV to lead EPA Region 6.

Former U.S. Representative from New York, Lee Zeldin, was confirmed as EPA Administrator on January 29, 2025.

Scott Mason IV has been nominated to replace Dr. Earthea Nance as Regional Administrator of Region 6 of the EPA, headquartered in Dallas, Texas. Mr. Mason previously served as a Deputy Secretary of Energy for Oklahoma and served as the Director of the EPA’s American Indian Environmental Office under President Trump’s first Administration. Region 6 implements federal programs in five states, including Texas, and 66 Tribal nations.

EPA Takes Aim at Biden-Harris Era, Older Water Rules.

In an announcement on March 12, 2025, the EPA Administrator took aim at rules promulgated under the Biden Administration and looks to dismantle regulations in some areas that have been regulated for much longer. At this time, these are policy positions and only limited actions have been taken, but these will be important areas to watch in the coming months and years:

• Proposed revision of 2024 Rules on Effluent Limitations Guidelines (“ELGs”) for steam electric power generators. The ELG rule for steam electric power plants, finalized in May 2024, will likely be revisited. These rules include lower effluent limits on wastewater discharges of toxic metals from coal-fired power plants.
• Administrator Zeldin also discussed revisiting ELGs for oil and gas extraction industries to allow for produced water (wastewater) from oil and gas extraction activities to be treated and used for agriculture irrigation and wildlife promulgation.
• The Administration’s pledge to redirect enforcement resources to “relieve the economy of unnecessary bureaucratic burdens” could lead to an increased burden on states to enforce federal environmental laws through state implementation plans.
• The presidential Administration has vowed to cut grants to state and local projects awarded by the EPA under the Bipartisan Infrastructure Law of 2021 that could also have a significant impact on state water revolving funds. (The state revolving funds provide money for drinking water and clean water infrastructure improvement and development.)

EPA to Revise Waters of the U.S. (“WOTUS”) Definition.

On March 12, 2025, the EPA Administrator announced the Agency’s renewed focus to clarify what falls within Waters of the U.S. EPA’s review will be guided by the Supreme Court’s decision in Sackett v. Environmental Protection Agency, which stated that the Clean Water Act’s use of “waters” encompasses only those relatively permanent, standing, or continuously flowing bodies of water forming streams, oceans, rivers, and lakes. The Sackett decision also clarified that wetlands would only be covered when having a continuous surface connection to waterbodies that are “waters of the United States” in their own right. The revision is intended to reduce red tape, permitting costs, and cost of business while still protecting navigable waterways from pollution. EPA established a Public Docket in 90 FR 13428, in which it announced it will hold at least six listening sessions, with two open to all stakeholders, and requests comments by April 23, 2025.

Nine More PFAS Added to the Toxic Release Inventory (“TRI”).

On January 3, 2025, the EPA added nine additional per- and polyfluoroalkyl substances to the TRI. TRI requires certain manufacturing and industrial facilities to track and report releases of certain chemicals that may cause a threat to human health and the environment into the environment. The newly added PFAS substances are not a part of Reporting Year 2024 but will take effect for Reporting Year 2025. The total number of listed PFAS is now 205. Because EPA classifies all TRI-listed PFAS as chemicals of special concern, there is no reporting exemption for facilities using any of the newly listed PFAS substances. This means that PFAS-using facilities must report PFAS information, even when used in small concentrations. Additionally, there are separate PFAS reporting requirements starting July 11, 2025, that require any person that manufactured or imported PFAS articles between January 1, 2011 and December 31, 2022, to report the PFAS’s use, volumes, disposal, exposure, and hazards. The final rule and specific PFAS added can be viewed at 90 FR 573.

Potential Cut to EPA’s Office of Research and Development (“ORD”).

While no changes have been finalized, as many as 75% of the ORD employees could be fired, with the remaining staff reassigned to other areas of the Agency. The Office of Research and Development is the main scientific research section of the EPA. The ORD is tasked with developing knowledge, assessment, and scientific tools to meet EPA’s protective standards and guidance. The program is split among six research programs: Air, Climate, and Energy, Chemical Safety and Sustainability, Health and Environment Risk Assessment, Homeland Security, Safe and Sustainable Water Resources, and Sustainable and Healthy Communities.

ORD research helps establish baseline chemical levels that federal statutes, like the Clean Water Act, rely upon. ORD also helps mobilize emergency response for national security events like hurricanes, train wrecks, or mining accidents for the Office of Land and Emergency Management. ORD’s research guides regulation for safe drinking water and understanding the impacts of toxins like arsenic, lead, and PFAS. Overall, the research helps determine national standards for regulatory compliance and enforcement. Losing the ORD could hinder the Agency’s ability to provide technical expertise to various EPA departments and potentially open the door to external industry influence.

Department of Interior (“DOI”)

Sustainable Water for Agriculture Plots Program to Research Water Saving Farming Practices.

The Bureau of Reclamation’s newest Sustainable Water for Agriculture Plots (SWAP) Program is aimed at determining if specific crops or agriculture practices are practical for their region. The overall goal of the study is keeping farmland in production while conserving water. Thus, the Bureau is looking for innovative crops and practices to reduce agricultural water use while keeping costs low, particularly for already water-stressed areas.

If successful, the crops and practices could reduce agricultural water demand by 25-75% while only costing farmers $250-500 per acre-foot of water saved. Ideally, program participants will create post-project agreements with their water districts that help cover implementation of water-saving crops and practices. The project is currently limited to water districts, Tribes, or acequias eligible for the Water-Saving Commodities Program under the Department of Agriculture. Programs will be evaluated based on the magnitude of projected water savings, estimate cost per foot of water saved, and whether it involves innovative crops or practices.

Texas Commission on Environmental Quality (“TCEQ”)

TCEQ Proposes Renewal and Revision of Certain Oil & Gas General Operating Permits.

On February 28, 2025, TCEQ proposed renewals of and revisions to Oil & Gas General Operating Permit (“GOP”) Numbers 511, 512, 512, and 514, each related air emissions under the Texas Clean Air Act. The revisions are based on changes to federal and state rules and include changes to: (1) the statement of basis; (2) Periodic Monitoring; (3) the requirements tables, including new tables; and (4) the terms. A public meeting will be held on March 31, 2025, which interested parties may attend virtually or in person. Those wishing to speak must register before March 28, 2025. Comments close on March 31, 2025. Once finalized, if any emission units, applicability determinations, or the basis for applicability determinations at a facility operated under any of the revised GOPs change, the permit holder must submit an application for a new authorization to operate (“ATO”) within 90 days of the GOP renewal date. No ATO is required if the revisions do not affect your site.

Texas Water Development Board (“TWDB”)

TWDB Approves over $120 Million for Water Projects.

On February 13, 2025 the TWDB approved over $52 million for projects related to water loss and water system improvements. The financial assistance allows construction of water infrastructure like wastewater treatment plants and flood mitigation projects. Over $35 million in grants was given to the Rural Water Assistance Fund for water loss projects. For most of these rural projects, grant funding covers between 90-100% of the total cost. These projects support small entities with populations of less than 1,000 and often include water main replacement, water lines/system improvements, and water storage tanks. Smaller assistance amounts went to cities in Dickens, Dallas, San Saba, and Nueces Counties for various water system improvements, like line replacements and additional fire hydrants. Again, in March, TWDB approved an additional $75 million in water and wastewater system improvements for rural communities including lead service line inventory and replacement projects.

Public Utility Commission of Texas (“PUC”)

Three Transmission-Only Electric Utilities File Comprehensive Base-Rate Cases.

On December 3, 2024, Wind Energy Transmission Texas, LLC (“WETT”) filed a statement of intent to change rates and tariffs, where it seeks a revenue requirement for the provision of electric transmission service in Texas of $136,602,978. This request represents an increase of $15,949,204, or 13.2%, over the adjusted test year revenues of $120,653,774. WETT also has requested a return on equity of 10.5%, cost of debt of 4.33%, capital structure consisting of no more than 55% debt and 45% equity, and overall rate of return of 7.11%. WETT’s requested rate increase is due in part to the $340.6 million of transmission investment, for which WETT asks the PUC to enter a finding of prudence, that it has placed into service since its last fully litigated rate case filed in 2015. The Steering Committee of Cities Served by Oncor (“OCSC” or “Cities”) and other stakeholders conducted discovery and filed direct testimony. More information can be found under PUC Docket No. 57299.

On January 14, 2025, Cross Texas Transmission, LLC (“Cross Texas”) filed a statement of intent to change rates and tariffs, where it seeks a revenue requirement of $76,506,194. This requested revenue requirement represents an increase of $5,037,282, or 7.05%, over its currently approved revenue requirement. Cross Texas is also asking for a return on equity of 10.60%, cost of debt of 3.94%, and its actual capital structure of 55.07% debt and 44.93% equity, which results in a weighted average cost of capital of 6.93%. Like WETT, Cross Texas bases its rate increase on the fact that it has invested over $190 million in capital in Texas since its last base-rate case filed in 2014. Additionally, Cross Texas is requesting approval of an hourly export rate of $0.000108 per kW pursuant to 16 Tex. Admin. Code § 25.192(e) for charges to power marketers exporting power from the Electric Reliability Council of Texas (“ERCOT”) for use of the ERCOT system. OCSC and other stakeholders are currently conducting discovery. More information can be found under PUC Docket No. 57467.

On January 31, 2025, Electric Transmission Texas, LLC (“ETT”) filed an application to change its rates and tariffs. ETT is a transmission-only utility that owns over 2,000 miles of transmission throughout the ERCOT region, including the Lower Rio Grande Valley and Texas Panhandle. In its application, ETT seeks a revenue requirement of approximately $426.3 million—a 15.3% increase over its currently approved revenue requirement. Additionally, ETT seeks a return on equity of 10.6% and a capital structure of 55% debt and 45% equity. This would result in a 7.13% weighted average cost of capital. ETT’s rate increase largely relies on $3.9 billion of invested capital since ETT’s last base rate case filed in 2007. Cities and other stakeholders are currently conducting discovery. More information can be found under PUC Docket No. 57518.

Commission Approves $44 Million Decrease in CenterPoint Electric Rate Case.

On March 13, 2025, the PUC approved a settlement in CenterPoint Energy Houston Electric, LLC’s (“CenterPoint” or “CenterPoint Electric”) pending rate case providing for CenterPoint’s present revenues to be decreased by $44 million. The final order additionally approves a $2.4 million reduction to CEO compensation expense and a one-time $5.2 million refund to retail and wholesale customers. Parties to the approved settlement agreed to a 9.65% return on equity.

CenterPoint filed its application in March 2024 seeking a nearly $60 million increase and a 10.4% return on equity. The case was nearing an evidentiary hearing when CenterPoint withdrew its application in August 2024. An Administrative Law Judge with the State Office of Administrative Hearings denied CenterPoint’s withdrawal and CenterPoint appealed that decision to the PUC. While the PUC was considering the decision over multiple months, CenterPoint withdrew its appeal and the parties continued settlement discussions. The Commission’s March 13th order is the result of several months of negotiations among PUC Staff, CenterPoint, the Office of Public Utility Counsel, and other affected parties.

The reduction to CenterPoint’s revenues will be allocated such that all rate classes receive a rate decrease. The residential rate class will receive an approximately $17 million decrease in rates. Additional information on this case is available on the PUC Interchange under PUC Docket No. 56211.

Commissioner Courtney Hjaltman Modifies Texas-New Mexico Power Company’s System Resiliency Plan Settlement.

As previously reported, after review of Texas-New Mexico Power Company’s (“TNMP”) proposed System Resiliency Plan (“SRP”) and identification of several projects and investments that were ineligible for SRP recovery or were not the most beneficial to ratepayers at this time, intervening parties, PUC Staff, and TNMP reached an agreement that reduced the proposed SRP by $57.1 million, and implemented several additional metrics that would allow stakeholders and PUC Staff to accurately monitor the implementation of TNMP’s SRP. This $57.1 million reduction results in an SRP that is estimated to cost $649 million over three years.

After PUC Commissioners evaluated TNMP’s proposed SRP and the Settlement Agreement, Commissioner Courtney Hjaltman filed a memorandum calling for the removal of two pilot programs relating to underground lines, a further reduction to TNMP’s requested Vegetation Management Program, and for clarification of metrics used to evaluate the SRP’s success. Commissioner Hjaltman reasoned that the pilot programs should be handled in TNMP’s normal course of business, and the Vegetation Management Program should be set at a lower amount based on a consultant’s report provided by TNMP itself. TNMP and Commissioners discussed Commissioner Hjaltman’s memorandum during the February 20, 2025 Open Meeting, and the Commissioners ultimately approved the reductions proposed by Commissioner Hjaltman at the March 13, 2025 Open Meeting.

Commissioner Hjaltman’s modifications are estimated to reduce the SRP by an additional $62.1 million. This reduction reduces ratepayers’ bill increase to $8.51 per month – as opposed to the $13.51 per month impact based on TNMP’s proposed SRP. More information can be found under PUC Docket No. 56954.

Oncor and Texas-New Mexico Power Company File Distribution Cost Recovery Factor (“DRCF”) Applications.

On February 14, 2025, Oncor Electric Delivery Company LLC (“Oncor”) filed an Application to Amend its Distribution Cost Recovery Factor (“DCRF”). In the filing, Oncor is seeking an increase in distribution revenues of $107.6 million. Notably, Oncor’s DCRF is the first DCRF filing in which a transmission and distribution utility (“TDU”) has sought recovery of SRP related costs. As previously reported, the Legislature recently created SRPs as an alternative mechanism for TDUs to recover “system resiliency” related costs. Cities and other stakeholders have intervened and requested discovery regarding the SRP costs and other aspects of Oncor’s DCRF. More information can be found under PUC Docket No. 57707.

TNMP has also filed an Application to Amend its DCRF. Filed on March 14, 2025, TNMP’s Application requests an increase in distribution revenues of $24.9 million. Unlike Oncor’s DCRF, TNMP’s request does not include the recovery of its SRP related costs. This is due to the fact that, as discussed above, the Commissioners did not make a decision on TNMP’s SRP until March 13, 2025, the day before TNMP filed its DCRF. More information can be found under PUC Docket No. 57816.

CenterPoint Files its Second System Resiliency Plan.

As previously reported, CenterPoint Electric filed a SRP in early May 2024, requesting to spend $2.28 billion over a three-year period in order to improve the resiliency of its system. After Hurricane Beryl, CenterPoint withdrew its application on August 16, 2024.

CenterPoint has now filed a second, updated proposed SRP. On January 31, 2025, CenterPoint filed its second SRP, which requests to spend $5.75 billion over a three-year period. This is a $3.47 billion increase over its first SRP that was withdrawn. CenterPoint’s second SRP also includes 39 resiliency projects, many of which were not included in its first SRP. Intervening parties and PUC Staff have begun reviewing CenterPoint’s SRP. More information can be found under PUC Docket No. 57579.

Mobile Generation Failures During Hurricane Beryl Remain in the Spotlight.

In September 2024, the Texas Consumer Association filed a complaint under PUC Docket No. 57061 asking the PUC to modify its previous rulings approving CenterPoint Electric’s leased mobile generation units and end all related cost recovery and return on investment. The complaint is in response to CenterPoint’s failure to deploy certain larger units during Hurricane Beryl last summer. Discovery and other procedural steps are ongoing in the docket.
It remains to be seen how the issue of mobile generation deployment failures may be addressed. The Legislature has at least two bills under consideration related to the issue – SB 231 by Senator Phil King and HB 4581 by Representative Ryan Guillen. One of the questions raised in the proposed bills is whether the PUC should be directed to modify a utility’s return if it finds evidence of unreasonable mobile generation leases or failure to deploy units.

Texas Railroad Commission (“RRC”)

Atmos Energy West Texas Rate Case Settles.

On October 25, 2024, Atmos Energy Corp., West Texas Division (“Atmos West Texas”) filed a rate application for its West Texas Division with the RRC and cities retaining original jurisdiction. In its application, Atmos West Texas requested to increase its revenues by $66.1 million, which will increase the annual revenues received from the incorporated areas by approximately $26.9 million. After evaluation of the rate application, and multiple settlement discussions, Atmos West Texas, RRC Staff and city intervenors came to a settlement agreement.

The settlement agreement results in a reduction to Atmos West Texas’ initial request of $66.1 million to $30.2 million, lowering of the requested residential customers charge of $25.00 per month to $16.75 per month, and reduction to the requested return on equity from 10.85% to 9.8%. The RRC has not made a final decision on the agreement. More information can be found on the RRC website, under Case No. OS-24-00018879.

“Agency Highlights” is prepared by Toni Rask in the Firm’s Water Practice Group; Mattie Neira in the Firm’s Air and Waste Practice Group; and Jack Klug in the Firm’s Energy and Utility Practice Group. If you would like additional information or have questions related to these agencies or other matters, please contact Toni at 512.322.5873 or trask@lglawfirm.com, or Mattie at 512.322.5804 or mneira@lglawfirm.com, or Jack at 512.322.5837 or jklug@lglawfirm.com.