White & Case LLPOn January 15, 2021, the US Environmental Protection Agency (the EPA) announced that it approved an application from the State of Texas to administer the National Pollutant Discharge Elimination System (NPDES) program for discharges into waters of the State from oil and gas operations. The specific discharges addressed by this action include produced water, hydrostatic test water and gas plant effluent.

The EPA, the State of Texas and proponents of the program transfer believe it promotes environmental protection and regulatory efficiency. In comments addressed by the EPA in the Federal Register, opponents to the change expressed a general distrust of the State's regulation of the oil and gas industry.

This federal action, which took effect during the final week of the Trump administration, provides for the Texas Commission on Environmental Quality (the TCEQ) to take over responsibility for permitting authority for such discharges from oil and gas ‎activities, pipelines and natural gas processing plants that were previously under the jurisdiction of the Texas Railroad Commission (RRC).

The State's request for this change required several legislative and regulatory steps. On June 14, 2019, Texas Governor Greg Abbott signed Texas House Bill (HB) 2771 directing the TCEQ to seek NPDES program authority. HB 2771 also ordered the transfer of permitting authority for these discharges from the RRC to the TCEQ upon approval of program authorization, and the transfer of program authority from the EPA to the TCEQ. On October 12, 2020, Texas formally submitted to the EPA a request for NPDES program authorization for oil and gas discharges.

After a review and consideration of public comments, the EPA determined that the request from Texas met the criteria of the Clean Water Act (CWA) and other federal regulations for approval of the NPDES program authorization. The CWA created the NPDES program under which the EPA may issue permits for the discharge of pollutants from a point source to waters of the US subject to such discharges meeting certain water quality standards. The CWA requires the EPA to authorize a state to administer an equivalent (i.e., equally protective) state program upon the governor's request, provided the state has the appropriate legal authority and a program that meets the CWA's criteria.

The program transfer should result in a more streamlined wastewater permitting process for oil and gas operators in Texas as all wastewater discharges in the state, with certain limited exceptions, are now regulated by the TCEQ. The TCEQ's authority to implement NPDES permitting, compliance monitoring and enforcement for oil and gas activities now applies to all discharges into water from facilities on land within the State of Texas, and extends three (3) miles offshore into the Gulf of Mexico. Spills or releases of hydrocarbons subject to the Oil Pollution Act and discharges of wastewater to waters on Indian lands remain within the EPA's direct area of responsibility and are not affected by the transfer of NPDES program authorization to the TCEQ. In addition, the RRC continues to regulate the land application of wastewater from oil and gas activities in Texas.

A Memorandum of Agreement (MOA) between EPA and the TCEQ describes in detail how NPDES permitting, compliance monitoring, enforcement activities and pretreatment activities are to be transferred to the TCEQ. The EPA will initially retain jurisdiction for permits for which appeals are pending and for enforcement actions that are currently ongoing. The MOA also describes the implications of the program transfer to the TCEQ for pending applications.

EPA Regional Administrator Ken McQueen stated: "This action will help Texas administer a process for the regulated community without unnecessary and duplicative permitting processes and ensure the best environmental and economic outcomes."

A copy of the EPA approval letter can be found here.

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