The Fifth Revision of the TCEQ’s Penalty Policy

Even the mention of a penalty provokes worry in the minds of regulated entities.  Now, what would happen if penalties were raised?  The Texas Commission on Environmental Quality (TCEQ) recently opened the public comment period on proposed Penalty Policy changes –which will result in higher fees and more violation events.  These changes were motivated by recent incidents that have caused significant public and environmental impact in Texas.

Penalties are evaluated by the TCEQ using percentages of a maximum penalty.  Each violation in an enforcement action is categorized as:

• Actual Release
• Potential Release
• Programmatic

The violations are further broken down as major, moderate and minor harm within each category above.  The determined percentage is multiplied by the highest penalty amount for the statute and this becomes the base penalty amount. Changes to these percentages can have a significant impact on the total base penalty for enforcement.  The following sections outline the changes and potential impacts of the revision to the TCEQ Penalty Policy.

Changes

Proposed changes to TCEQ’s Penalty Policy include increased percentage penalties for actual releases and potential for major and minor sources, increased percentage penalties for programmatic violations, increased frequency of penalties for continuous violations events, and inclusion of a penalty enhancement for emissions events that can be enforced in counties with a population of 75,000 people or more.

• For major sources actual release events, the statutory maximum penalty recommended for moderate and minor harm will increase from 30 to 50% and 15 to 30% respectively. The base penalty amount will increase due to this change.
• For minor sources actual release events, the statutory maximum penalty recommended for major, moderate, and minor harm increase from 30 to 50%, 15 to 25%, and 5 to 15% respectively. The base penalty amount will increase due to this change.
• For programmatic major violations, the recommended statutory maximum penalty will increase from 15 to 20% for major sources and 5 to 10% for minor sources. The base penalty amount will increase due to this change.
• For continuous events that do not have a daily frequency period, frequency periods will increase by one step (i.e., single events will be tracked quarterly, quarterly events will be tracked monthly, and monthly events will tracked weekly). The smaller evaluation time period will likely result in a higher total penalty for continuous events.
• For sites which have violation events in counties with a population of 75,000 or more, a penalty enhancement of up to 20% can be enforced.

In addition to the changes listed above, the proposed Penalty Policy changes affect dry cleaners, aggregate production operations, and underground petroleum storage tanks.

• For dry cleaners that are not registered, a penalty up to $50 per day will be issued for every day after the 30^th day registration fees are due. The same penalty applies to late dry cleaner registration applications for every day after the 30^th day the application must be submitted.
• For aggregate production operations that operate without registration, the yearly penalty will increase from $10,000 per year to $20,000 per year. The maximum total penalty will increase from $25,000 to $40,000.
• For facilities that have underground petroleum storage tanks on site, major source designation will increase from 50,000 gallons per month to 100,000 gallons per month.

Next Steps

The public comment period for these changes began on September 30, 2020 and will continue until October 30, 2020.  Contact information, a link to the proposed changes document, and more information can be found on the TCEQ’s website here.  If you have any questions about these upcoming Penalty Policy changes or the public comment process, contact us.