Agency Highlights

United States Environmental Protection Agency (“EPA”)

EPA Issues First Permits for Class VI Underground Injection Wells in Texas and Proposes to Approve Texas’ Application to Administer Class VI Underground Injection Well Program. Class VI underground injection wells are a relatively new concept utilized for carbon sequestration projects to capture, inject, and sequester carbon dioxide (“CO2”) into deep rock formations, ultimately removing greenhouse gases from the atmosphere. Currently, only four states have primacy over Class VI well permitting, with EPA issuing and enforcing permits in all other states. However, many states, including Texas, have applied for primacy, which allows a state to issue and enforce permits.

On June 9, 2025, EPA announced its proposed approval to allow the Texas Railroad Commission to permit Class VI wells. The proposed rule, once finalized, would give the Railroad Commission enforcement primacy over Class VI wells, giving Texas primacy over all classes of underground injection wells. The proposed rule was published in the Federal Register on June 17, 2025, and EPA will accept comments until August 1, 2025.

Additionally, while there are various permit applications pending or planned to be submitted in Texas, EPA issued the first Class VI permits in Texas on April 7, 2025. The permitted wells will store approximately 722,000 metric tons of carbon per year.

EPA Issues Memorandum Clarifying Clean Water Act (“CWA”) Implementation. On May 21, 2025, the EPA issued a memorandum clarifying the specific role that states and tribes play in federal licensing and permitting under Section 401 of the CWA. The memorandum is a clarification of how the scope of certification regulations are to be implemented. In 2023, EPA issued regulations allowing a certifying agency to consider and base certification on how federally licensed and permitted projects affected water quality as a whole instead of at the point source of discharges.

The memorandum clarifies that the 2023 regulation allows a certifying authority to only consider adverse impacts to water quality and only insofar as they prevent compliance with applicable water quality standards. They do not authorize a certification condition based on generalized concerns about water quality that are not connected to specific applicable water quality requirements. EPA also announced its intent to issue Federal Register notice and recommendations docket to identify areas of implementation challenges and uncertainty related to the 2023 rule.

EPA Announces Changes to Nationwide Limits on Per- and Polyfluoroalkyl Substances (“PFAS”) in Drinking Water. On May 14, 2025, the EPA Administrator announced changes to nationwide limits for PFAS in drinking water. The announcement indicated the EPA’s intent to extend compliance deadlines, establish a federal exemption network, and initiate enhanced outreach to water systems.

The EPA will keep its current drinking water standards for Perfluorooctanoic acid (“PFOA”) and perfluoro-octane sulfonate (“PFOS”) while announcing its intent to rescind and reconsider drinking water standards on five other PFAS-derivative chemicals.

EPA in the same announcement additionally announced its intention to initiate rulemaking to extend the deadline for public water systems to comply with Maximum Contaminant Levels (“MCLs”) of the regulated PFAS. The current rule gives public water systems until 2029 to comply with MCL’s while EPA intends to extend the compliance date to 2031. EPA announced its intent to issue a proposed rule to extend the compliance date to Fall 2025 and finalize the rule in Spring 2026. The EPA also intends to create a federal exemption network related to MCLs of PFAS. A spokesperson for the EPA specified that the plans to establish a federal exemption network would be to allow for additional time to find a compliance solution.

EPA will launch PFAS OUT to connect with public water utilities that need capital improvements to address PFAS in their systems. The program would be created to share resources, tools, funding, and technical assistance to help ensure utilities are compliant with the new PFAS regulations.

EPA Announces Updates Regarding Passive Receivers of Per- and Polyfluoroalkyl Substances (“PFAS”). On April 28, 2025, the EPA Administrator outlined upcoming agency action to address PFAS, including clarification on the issue of passive receivers’ liability under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as Superfund). When EPA previously designated PFOA and PFOS as hazardous substances under CERCLA, many commenters requested an exception for passive receivers. While EPA did not include such an exception in the regulation language, it published guidance shortly after the final rule which stated that passive receivers would generally not be targets of enforcement actions. However, the guidance is non-binding and does not shield operators from third party suits under CERCLA. In the April 28th announcement, EPA indicated that it intends to continue the polluter pays model and focus enforcement on polluters or those emitting PFAS, not passive receivers. In furtherance of this intention, EPA indicated a desire to work with Congress to shield passive receivers from liability as well as plans to update its PFAS Destruction and Disposal Guidance more frequently from every three years to annually.

EPA Announces Plans to Address PFAS Contamination. On April 28, 2025, the EPA Administrator outlined upcoming agency action to address PFAS. Among other items, EPA plans to designate an agency lead for PFAS and the creation of effluent limitations guidelines (“ELGs”). The new designated agency lead for PFAS would help align any agency PFAS efforts across its many programs. No specifics were given for who or when the designation would be announced.

EPA intends to continue efforts to develop ELGs specifically for PFAS manufacturers and metal finishers. EPA also intends to evaluate other ELGs as necessary for reduction in PFAS discharges.

EPA and Health and Human Services (“HHS”) Announce Review of Fluoride Health Risks in Drinking Water. On April 7, 2025, the EPA Administrator and the Secretary of HHS jointly announced the agencies’ decision to review new scientific information on the potential health risks associated with fluoride in drinking water. EPA and HHS will coordinate research efforts according to the announcement. The review is in response to The National Toxicology Program Report that concluded with moderate confidence that fluoride exposure above 1.5 milligrams per liter may be associated with detrimental health effects in young children. The new scientific evaluation will inform EPA decisions on the standard for fluoride in drinking water and whether EPA’s current fluoride standard—4.0 milligrams per liter—should be lowered.

Texas Office of the Attorney General (“AG”)

AG Files Suit Against Travis County for Failing to Comply with Post Closure Care Requirements at County Landfill. On May 13, 2025, the AG filed suit against Travis County after an investigation by the Texas Commission on Environmental Quality (“TCEQ”) alleged that the Travis County Landfill (the “Landfill”) which operated from 1968 until 1982 was in violation of various post closure care requirements.

In its Petition, the AG alleges that on March 8, 2024, TCEQ conducted a compliance investigation at the Landfill and found violations including vegetation growing into and penetrating the Landfill cap, subsidence and ponding, and leachate leaks. TCEQ sent the notice of violation letter shortly after the inspection and provided actions to be completed to return to compliance. On December 16, 2024, TCEQ found that Travis County’s compliance progress was inadequate. The Petition alleges that there continues to be leachate leaks and issues with the leachate drainage system, holes in the Landfill cap from removing trees and vegetation, continued vegetation growth into the cap, and subsidence and ponding.

The AG is bringing claims for civil penalties for unauthorized discharge of waste into state water and failure to follow minimum design operation, closure, and post-closure requirements. The AG is also bringing a claim for injunctive relief to bring the Landfill into compliance.

Public Utility Commission of Texas (“PUC”)

Three Transmission-Only Electric Utility Comprehensive Base-Rate Cases Settle.
Wind Energy Transmission Texas, LLC (“WETT”)
As previously reported, WETT filed a statement of intent to change rates and tariffs on December 3, 2024, seeking a revenue requirement for the provision of electric transmission service in Texas of $136,602,978, an increase of $15,949,204 over the utility’s adjusted test year revenues. WETT also requested a return on equity (“ROE”) of 10.5%, cost of debt of 4.334%, capital structure consisting of no more than 55% debt and 45% equity, and overall rate of return of 7.11%. The Steering Committee of Cities Served by Oncor and other stakeholders conducted discovery and filed direct testimony. After discussions with WETT and the other parties, all parties reached a settlement agreement resulting in a revenue requirement of $130,631,220, ROE of 9.6%, cost of debt of 4.33%, capital structure of 59% long-term debt and 41% equity, and overall rate of return of 6.493%. The Commission approved the rates, terms, and conditions set forth in the settlement agreement on June 20, 2025. More information can be found under PUC Docket No. 57299.

Cross Texas Transmission, LLC (“CTT” or “Cross Texas”)
As previously reported, CTT filed a statement of intent to change rates and tariffs on January 14, 2025, where it sought a revenue requirement of $76,506,194, representing an approximately 7.05% increase over its currently approved revenue requirement. Cross Texas also asked for a return on equity of 10.60%, cost of debt of 3.94%, and CTT’s actual capital structure of 55.07% debt and 44.93% equity, which results in a weighted average cost of capital of 6.93%. The Steering Committee of Cities Served by Oncor and other stakeholders conducted discovery and filed testimony. After discussions with CTT and the other parties, all parties have reached a settlement in principle. More information can be found under PUC Docket No. 57467.

Electric Transmission Texas, LLC (“ETT” or “the Company”)
As previously reported, ETT filed an application to change its rates and tariffs on January 31, 2025. ETT—a transmission only utility operating over 2,000 miles of transmission throughout ERCOT—sought a revenue requirement of approximately $426.3 million, representing a 15.3% increase over ETT’s current revenue requirement. Additionally, ETT requested a return on equity of 10.6% and a capital structure of 55% debt and 45% equity.

On June 12, 2025, ETT filed a stipulation and settlement agreement. After Cities, Commission Staff, and other intervenors filed testimony recommending various reductions to ETT’s request, the Company agreed to reduce its requested revenue requirement by $36.3 million, resulting in a settled revenue requirement of $390 million. The settlement agreement is subject to the Commission’s review, and should receive final approval before the end of July.

Oncor Electric Delivery Company, LLC (“Oncor”) and Texas-New Mexico Power Company (“TNMP”) Distribution Cost Recovery Factor (“DCRF”) Proceedings Settle.
Oncor
As previously reported, Oncor filed an Application to Amend its DCRF on February 14, 2025, seeking a $107.6 million increase in distribution revenues. Notably, this was the first DCRF proceeding where a transmission and distribution utility sought recovery of System Resiliency Plan (“SRP”) related costs. The Legislature recently created SRPs as an alternative mechanism for utilities to recover “system resiliency” related costs.

On March 26, 2025, Oncor filed a stipulation and settlement agreement, which the Commission approved on April 24, 2025. During settlement negotiations, Cities and other intervenors challenged Oncor’s SRP related request, and the Company ultimately agreed to remove all SRP costs from this DCRF. Accordingly, Oncor agreed to an approximately $1.3 million reduction to its original DCRF request. The Company will seek to recover its SRP costs in a future base rate proceeding.

TNMP
As previously reported, TNMP filed an Application to amend its DCRF on March 14, 2025. TNMP requested an increase in distribution revenues of $24.9 million. Unlike Oncor, TNMP did not request to recover any of its System Resiliency Plan costs due to the timing of the PUC’s approval of its Resiliency Plan. Cities Served by Texas-New Mexico Power Company intervened in the proceeding to evaluate the request and participate in discovery.

Only one intervening party, Texas Industrial Energy Consumers, filed a recommendation indicating two issues with the request. Ultimately, an Order was filed on May 15, 2025, approving the Application as filed. The Order can be found on the PUC Interchange in Docket No. 57816.

AEP Texas, Inc. (“AEP”) and CenterPoint Energy Houston Electric, LLC (“CenterPoint”) File Applications to Amend Mobile Temporary Emergency Electric Energy Facilities (“TEEEF”) Riders.
AEP
On May 7, 2025, AEP filed an Application to Amend its Rider Mobile TEEEF. Under the Public Utility Regulatory Act, a transmission and distribution utility may lease and operate facilities that provide temporary electric energy to distribution customers during a significant power outage. A utility may recover the reasonable and necessary costs of leasing and operating these facilities through a rider—the TEEEF Rider.

Here, AEP is seeking a total TEEEF Rider revenue requirement of $36.2 million. If the Commission approves AEP’s request, the average residential customer’s monthly bill would increase by approximately $0.60 per month. AEP Cities and other parties have intervened to review AEP’s request. The Parties will soon initiate discovery and may ultimately challenge aspects of AEP’s application. We will provide updates as AEP’s TEEEF application proceeds.

CenterPoint
Within two months, April and May, CenterPoint filed two applications with the PUC relating to its TEEEF capacity and rates. Both applications, however, have very different requests.

On April 18, 2025, CenterPoint filed an Application to Reduce its TEEEF Capacity and Rates. As discussed above, this reduction stems from a solution to the ongoing concerns surrounding CenterPoint’s lack of use of its recently acquired mobile generation units, and CPS Energy’s proposed retirement of the operations of three of its natural gas generation units. CenterPoint entered into an agreement with the Electric Reliability Counsel of Texas and CPS Energy to relocate CenterPoint’s mobile generation units to San Antonio, CPS Energy’s service area. As a result of this agreement, CenterPoint is requesting to reduce its capacity by approximately 480 MW and reduce its TEEEF revenue requirement by $24 million. This results in a reduction to the average residential customer’s monthly bill by approximately $2.00 per month in 2027.

Soon after CenterPoint’s Application requesting a reduction, on May 27, 2025, CenterPoint filed an Application for Authorization to Lease TEEEF. On January 8, 2025, 16 Texas Administrative Code
§ 25.56, was adopted and went into effect. This rule specifically refined the scope of TEEEF filings and required utilities to request authorization from the PUC to lease TEEEF units. Pursuant to this rule, CenterPoint is requesting authorization to enter into two new lease agreements for small TEEEF that will allow CenterPoint the ability to respond to severe weather events. In its Application, CenterPoint is not requesting an increase to its rates.

The Gulf Coast Coalition of Cities has intervened in both proceedings to evaluate CenterPoint’s requests, participate in discovery, and potentially challenge aspects of CenterPoint’s requests. More information on the applications can be found on the PUC’s interchange in Docket Nos. 57980 and 58107. We will provide updates as the applications proceed.

CenterPoint System Resiliency Plan Settles. As previously reported, CenterPoint filed its second, updated proposed System Resiliency Plan (SRP) in late January. CenterPoint requested to spend $5.75 billion over a three-year period on 39 resiliency projects. Intervening parties and PUC Staff conducted discovery, filed testimony challenging projects in the SRP that were ineligible for SRP recovery or were not beneficial to ratepayers at this time, and participated in settlement discussions with CenterPoint. After weeks of discussions, a settlement was reached. Filed on June 12, 2025, the settlement reduced SRP by $2.576 billion. Under the settlement, CenterPoint will spend an estimated $3.178 billion over three years on 30 resiliency projects and will defer $242 million to a fourth year in order to decrease the impact on ratepayers. The PUC has not approved the settlement and will be considering the settlement at an upcoming Open Meeting. The settlement agreement can be found on the PUC’s Interchange in Docket No. 57579.

PUC Rulemaking Update. PUC Staff’s current rulemaking calendar for 2025 can be found under Docket No. 57606. Commission Staff has noted the rulemaking calendar does not capture the full breadth of its rulemaking and other legislative implementation activities. Staff is currently engaged in scoping and scheduling rulemaking projects that are not yet reflected on the calendar. The rulemaking calendar and dates included are subject to change, but the following projects appeared on the rulemaking calendar as of May 7, 2025:

• Project No. 57603 – Unplanned Generation Service Interruption Reporting
• Project No. 52059 – Review of Commission Filing Requirements
• Project No. 57374 – Exemption Process for ERCOT Technical Standards
• Project No. 57602 – Permian Basin Reliability Plan Reporting Requirements and Monitor
• N/A – Standard Generation Interconnection Agreement
• N/A – Review of § 24.167
• N/A – NonERCOT Fuel Recovery
• Project No. 56574 – Rule Review for Chapter 22 – Procedural Rules
• Project No. 57819 – CCN Mapping Resources Webpage Attestation Requirement
• N/A – Expedited STM & Temporary Rates
• N/A – Temporary Managers & Emergency Orders
• Project No. 52301 – ERCOT Governance and Related Issues
• Project No. 54233 – Technical Requirements and Interconnection Processes for Distributed Energy Resources
• Project No. 55249 – Regional Transmission Reliability Plans
• Project No. 56736 – Retail Sales Report
• Project No. 57883 – Commission Directives to ERCOT
• Project No. 57928 – Review of 25.53, Electric Service Emergency Operations Plan

“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.