Supplemental Environmental Projects

Supplemental Environmental Projects

As the day wore on, Chairman White shocked the crowd by announcing only tentative support for continuing the Supplemental Environmental Projects program – contingent upon improvements. Staff ideas included expanding the preapproved list of SEP’s (with input from local communities as part of this process), providing SEP information to respondents during the initial investigation exit briefing, limiting SEP opportunities to those respondents who reach agreement on the assessed penalty amount to 30 days after receiving the draft order, and allowing no more than 90 days for reaching final agreement on a SEP prior to referring the case for litigation. Staff also preferred limiting SEP’s to projects that benefit the environmental media affected by the violations and requiring SEP’s to be performed exclusively in the community (or county) where the violation occurred.

The Commissioners had problems with several of these recommendations. Commissioner Marquez said that there should be flexibility to allow for complex SEP’s not on the preapproved list and that SEP’s should still be allowed as a negotiating tool after a case has gone to litigation. Commissioner Soward suggested that an upstream Bosque River Basin violator might perform a SEP that would benefit Lake Waco, thus that the affected community may not only be in the same county. Given the reality of air pollution transport, for example, air quality SEP’s in the Houston area might even benefit people in Austin. Commissioner Soward noted a recent SEP in which an air quality violator paid for the plugging of abandoned wells.

Chairman White expressed her desire that the chief criteria for SEP’s be direct, significant, and enduring environmental or public health benefits. Commissioner Marquez objected to the premise that industry “benefits” from SEP’s and challenged the 2-1 offset requirement for industry SEP’s. But Executive Director Glenn Shankle noted that few entities are willing to perform SEP’s with higher offsets (TCEQ uses a 2-1 offset for projects with indirect benefits and a 3-1 offset for educational projects).

White then expressed her doubts that environmental education SEP’s were worth pursuing, even though the Legislature created the Texas Environmental Education Partnership Fund Board with an eye toward using SEP monies for such projects as air quality monitors in public schools. SEP monies have also been used in the part for the water wise program – which includes distributing water-saving equipment to students for installation in their homes and reporting on water savings. The TEEP Fund Board is allowed to keep up to 7% of its SEP monies for administrative costs, as it has no other funds.

In OUR view, the Commission is short-sighted not to consider the real benefits of educational SEP’s – if they are tied to real activities (such as planting trees or assisting in local household hazardous waste, scrap tire, and other cleanup projects). Such projects provide hands-on opportunities for young people to perform environmentally beneficial services and learn lifelong habits that will yield benefits for decades to come. Such projects could go a long way toward providing incentives for young people to enter environmental and energy science fields of study (including science education).

Such projects might also go a long way toward resolving another SEP issue – the public’s and the regulated community’s understanding of how SEP’s are used in TCEQ enforcement. Staff admitted a need to better publicize and distribute information regarding the SEP program, especially as to its benefits and costs. This includes information that SEP’s may not provide an opportunity for a violator to gain public relations brownie points.

There are, however, real problems on both ends here. TCEQ does not publish (and may not have even gathered) information on what bang it has gotten for its bucks in the SEP program. Commissioner Marquez suggested that staff should let Texans know how many families have been connected to public water and wastewater systems, how many cleaner burning school buses are now on the road, how much household hazardous waste and how many scrap tires have been collected (and so on) as a result of the SEP program. Commissioner Soward called for a full reporting on SEP program benefits – including wetlands and habitat set aside.

Given the public perception that industry gains a benefit from large SEP’s, and the need for TCEQ to collect some general revenue from its penalty program, maybe TCEQ might go slow on 100% offsets of penalties for industry. But we would like to know the economics of the 2-1 offset for smaller penalties (say, up to $5,000 or even $10,000) that might otherwise all go to a local project and provide a direct environmental benefit to a local community (especially in a nonattainment area).

Why not allow 100% (1-1) offsets for any violation that involves penalties up to a fixed amount, and then apply a higher offset (if indeed an offset is deemed necessary)? This would effectively increase monies available to valuable projects for which funds are in short supply – even to air quality projects that otherwise might be funded under the Texas Emissions Reduction Program. It might also provide a good public relations tool for TCEQ to spread penalty monies around to local projects that benefit the environment. We already restrict the use of SEP’s to respondents in good standing.

Another area of concern is the documentation of work performed under a SEP – especially work performed by third party contractors. Staffers noted that up to 5% of SEP’s are not completed as promised, and that TCEQ has recovered some monies (which go to general revenue) from these unfinished projects. Staff also recommended that anyone who fails to comply with the technical requirements of a SEP agreement be ineligible for future participation in the SEP program.

There was a question regarding the requirement that respondents quantify the environmental benefit actually achieved by an individual SEP. If the SEP involves contributions to a third party, how can the respondent be held accountable for that entity’s actions? We note that there should be at least the expectation of a certain level of benefits from each preapproved SEP category, and that those performing such SEP’s should demonstrate how actual results stacked up against anticipated results (for example, tires collected per dollar invested), with an explanation of any factors (such as varying costs for installing wastewater systems in different locales) that might account for differences. But third parties performing SEP’s – not those providing the monies – should be the ones held accountable, in our view.

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