The Nickel Report

The Texas Commission on Environmental Quality (TCEQ) is moving forward with steps necessary to seek delegation of the federal National Pollutant Discharge Elimination System (NPDES) permitting program for produced water discharges. In doing so, Texas will be joining similar efforts underway or under consideration in the neighboring states of Oklahoma and New Mexico. Should EPA delegate such NPDES authority and separately take action to address the restrictive federal regulatory framework now in effect for onshore produced water discharges, this would result in streamlined and expanded beneficial reuse options for produced water in the key oil and gas producing states in the country.

The Railroad Commission of Texas (RRC) has authority to issue permits for discharges associated with oil and gas operations in the state, but it does not have delegation of the NPDES permitting program. Thus, to the extent that produced water discharges are not currently barred under federal regulations[1], facilities seeking authorization for these discharges to waters of the US must obtain authorization from both EPA and the RRC. This regulatory permitting framework is about to change. Under recent Texas legislation that becomes effective September 1, 2019,[2] the state permitting authority for produced water discharges, hydrostatic test water and gas plant effluent was transferred from the RRC to TCEQ. The new law also directs TCEQ, which obtained NPDES delegation for discharges that are not associated with oil and gas operations more than a decade ago, to submit a request for delegation of the federal NPDES permitting authority for produced water and the other referenced discharges to EPA no later than September 1, 2021.

As a first step in implementing the new law, TCEQ is convening a stakeholder meeting on September 17, 2019, at TCEQ headquarters in Austin, Texas. Topics to be covered include implementation tasks and schedule, elements of the planned delegation application and permitting and compliance issues.[3] Amendment of the current Memorandum of Understanding between the RRC and TCEQ[4] will undoubtedly be undertaken to, among other things, reflect the transfer of wastewater permitting authority for produced water discharges and related oil and gas wastewaters from the RRC to TCEQ.

Meanwhile, at the federal level, EPA continues its evaluation of produced water management options, including consideration of whether the current zero discharge standard for onshore produced water discharges should be replaced with alternative regulatory approaches such as numerical effluent limitation guidelines (ELGs). Stakeholders remain divided over whether there is sufficient information for EPA to ease regulatory restrictions or if additional research is necessary to allow for future beneficial reuse of produced water outside the oil patch. Evaluation of the additional stakeholder input received this summer on EPA’s Draft Study of Oil and Gas Extraction Wastewater Management Under the Clean Water Act is not yet complete. However, EPA is reportedly poised to finalize its evaluation and determine how it will proceed in the near term.

[1] See "Expert Analysis: Spotlight On Produced Water Management Options Intensifies," published in Law360, by  Lydia González Gromatzky.

[2] See House Bill (HB) 2771 relating to the authority of the Texas Commission on Environmental Quality to issue permits for the discharge into water in this state of produced water, hydrostatic test water, and gas plant effluent resulting from certain oil and gas activities (effective September 1, 2019).

[3] See TCEQ Oil and Gas Discharge Delegation Stakeholder Meeting Tentative Agenda.

[4] See 16 Texas Administrative Code (TAC) §3.30.