By Cyrus Reed and Alex Ortiz
Well It was dramatic!
The 88th Texas Legislative Session had too many twists and turns to believe, as bills that were dead and dusted came back, and legislators went to the wire. To say there was high drama is an understatement, as bills on water infrastructure, the electric grid (including state loans and incentives for gas plants) the Public Utility Commission of Texas “Sunset” bill, and a corporate welfare bill literally passed on Sunday afternoon and evening - the final hours of the regular session.
The last minute fireworks
Some of the tension between the House and Senate was certainly exacerbated by the stunning impeachment of Attorney General Ken Paxton by the House on a 120-23 bipartisan vote. The impeachment process now goes to the Senate, where Paxton’s wife, Angela Paxton, is a powerful State Senator.
Meanwhile, the Texas Legislature - despite a $32 billion surplus and another $20 billion plus in rainy day funds – failed to increase the basic allotment for public education, and give teachers a raise, as Governor Abbott insisted on including vouchers for private schools, effectively killing those bills for now. Also failing was property tax relief - it’s in the budget - but the underlying bill didn’t pass due to significant differences between the House and Senate over how to provide property tax relief. As expected, the Governor immediately called a special session on property tax relief and border security, as plans to create a deputy force of border enforcers was effectively killed in the House. Future special sessions on school finance and other items are expected to be called in September.
The Sierra Club was involved in much of the drama, as we pushed and pushed to get them to pay attention to consumer-friendly solutions to our electric grid crisis, even as Lieutenant Governor Dan Patrick continued to pursue policies focused on hurting wind and solar energy. Before we explain the twists and turns of the various pieces of legislation related to the electric grid and corporate welfare for polluters, it’s important to remember the other big issues: budget, TCEQ sunset, water infrastructure, state parks, and of course, city bashing.
Justice and equity attacked
We must also acknowledge that there was significant harm taken by the legislature on some important democracy and social justice issues. Versions of legislation laser focused on trans children and so-called “drag shows” did pass, and election bills that will criminalize any perceived fraud by confused voters also were approved. Also in the crosshairs of the legislature was Harris County elections, including the potential for the Secretary of State to unilaterally declare an election in one county - Harris County - also were approved. Essentially, the legislature used their power to punish Harris County voters for electing Democrats for most important county-wide elected positions, including County Judge, currently held by Lina Hidalgo. Finally, despite desperate appeals by tens of thousands of Texans, including the families of the victims gunned down in Uvalde, El Paso, and so many other mass shootings, no gun control legislation ever moved forward.
It’s hard to totally celebrate the historic budget when perhaps the most important issues - our public schools and teachers - were ignored. In fact, teacher salaries and increases in “allotment” per student - were never approved, largely because the Senate refused to remove a poison pill private school voucher bill off of the main bill - but on many of Sierra Club’s specific issues there is much to celebrate.
On state parks, many of the requests made by the Texas Parks and Wildlife Department that Sierra Club supported were granted, and one big request they did not request - $1 billion for land acquisition subject to voter approval - was included in the budget, which only goes into effect if the separate constitutional amendment is approved by voters. Given that last session, TPWD only received some $27 million for land acquisition, the potential for $1 billion is a huge investment.
The Public Utility Commission of Texas (PUCT) and Texas Commission on Environmental Quality (TCEQ) - both under Sunset review - received healthy budget increases as well. Included int the PUCT budget were two of the Sierra Club’s main asks: money for an Office of Public Engagement and money for an Office of Energy Efficiency to help coordinate the increased funding expected from the federal government. For TCEQ, not only did the agency receive an extra $3.5 million for air monitoring, they received additional funding to put all their permits and applications online and improve access to information, a specific demand of the Sierra Club.
Similarly, the Railroad Commission of Texas (RRC) budget incorporated federal funds for plugging oil and gas wells, extra money for pipeline inspectors, and again, one of our specific demands, a requirement that enforcement and inspection data be reported online for better transparency.
Finally, the Texas Water Development Board (TWDB) also received significantly more funds than expected, including $1 billion in additional funds - subject to approval by voters (see below), some $625 million for flood infrastructure, about $125 million for clean water and drinking water as matching funds for additional federal funds (literally billions), and finally authorization to issue another $100 million for the Economically Distressed Areas Program (EDAP).
On all of these issues, the Sierra Club was actively working, publicly and behind the scenes, to ensure the budget would include these items, and it did.
We wish we came up with the idea, but we certainly supported the creation of the Centennial Parks Fund, a new fund that will allocate money for acquiring private lands for state parks. SB 1648 and SJR 74 were introduced by Sen. Tan Parker (R-Flower Mound) and carried in the House by Rep. Armando Walle (D-Houston), with important assistance by Rep. Ken King (R-Canadian) (who had a very similar bill). Both bills passed with near unanimous bipartisan support and assuming voters approve the constitutional amendment, will lead to $1 billion in 2024 and 2025 for the TPWD to take advantage of opportunities to purchase land for new state parks. We acknowledge the great work by Environment Texas in spearheading the issue, and we were pleased to find common ground with so many that the state must invest in new parks for our residents.
Water infrastructure and economically distressed areas
No one denies the Texas Water Development Board Sunset bill (HB 1565) passed! This bill was the culmination of a lot of work across multiple groups of stakeholders. One of the most exciting statutory changes was that the bill expressly granted authority to regional water planning groups for them to be able to plan for a drought worse than the drought of record. To be fair, the regional water planning groups already could do this (and some have been) because of good guidance from the TWDB — but having this codified in statute is a good change that recognizes how climate change is likely to affect the way our agencies plan for the future.
The biggest water topics of conversation of this session were SB 28 and SJR 75. SB 28 created two new funding mechanisms at TWDB: the Texas Water Fund and the New Water Supply for Texas Fund, while SJR 75 makes the necessary funding and creates the Texas Water Fund as a constitutional fund as well. The Texas Water Fund is a large umbrella fund which gives TWDB substantial discretion to distribute funds to other accounts for specific projects, while the New Water Supply for Texas Fund aims to acquire 7 million acre feet of water within the next decade through potentially expensive and risky technologies like marine desalination or technologically unproven and unsafe methods like produced water treatment. It will be up to TWDB to define what constitutes a new water supply source, and hopefully the Board takes a cautious approach rather than circumventing existing guidelines for developing existing water sources, like those that exist in the State Water Implementation Fund for Texas (SWIFT).
The Texas Water Fund will also be on the ballot as a constitutional amendment in the fall as a result of SJR 75. This fund was supposed to empower the agency to target the help to the parts of the state that need it most for continued water service among other projects. There are two types of priority communities that are guaranteed to be recipients of funding: rural political subdivisions and municipalities with a population of less than 150,000. An amendment by Rep. Ana-Maria Ramos (D–Richardson) would have added “economically distressed areas” to the priority communities. The amendment passed on the House version of SB 28 but was struck in negotiations during the conference committee, specifically called out by the author of the bill, Sen. Charles Perry (R–Lubbock). The provision would have ensured that some portion of the funding goes to communities of color that have faced historic disinvestment at the hands of the state. Fortunately, TWDB still has the opportunity to include such criteria in further rulemaking, but it isn’t required of them.
Speaking of economically distressed areas — there were three great EDAP bills filed: HB 3522 and HB 3523 by Rep. Mary González (D–Clint) and SB 1823 by Sen. Nathan Johnson (D–Dallas). These bills would have empowered TWDB to provide even more financial assistance through EDAP, and expanded the program to include drainage and flooding issues in these communities. While HB 3522 and HB 3523 both passed the House, they were never heard in the Senate, where Sen. Charles Perry is the gatekeeper of the Committee on Water, Agriculture, and Rural Affairs. Similarly, SB 1823 was never heard in the committee either.
One of our major priority bills, HB 4144 by Rep. Erin Zwiener (D–Driftwood) got a hearing but didn’t make additional progress. This bill would have required TCEQ to analyze and consider pre-production plastic pollution (like nurdles) in the development of the Texas Surface Water Quality Standards. Nurdles wreak havoc on the environment and our coastal communities through bioaccumulation and biomagnification of toxic chemicals throughout the food chain, as well as harming native fish and other wildlife that support coastal recreational and commercial fishing economies. While the bill unfortunately didn’t make it out of committee — a hearing is a step in the right direction!
Cities were on the chopping block again this session, as state Republican leadership decided it is their goal to prevent Democratic mayors from making policy decisions they disagreed with.
By far the worst anti-city (and county) bill this session was HB 2127, the so-called super-preemption bill, which prevents cities from taking action on hundreds of issues - unless the Legislature gives them specific authority.
The bill by Rep. Dustin Burrows (R-Lubbock), and carried in the Senate by Sen. Brandon Creighton (R-Woodlands), literally reverses 100 years of Texas tradition by making so-called home-rule cities (basically the 300+ largest cities) have the same authority as counties and non home-rule cities for most issues having to do with labor, occupations, natural resources, and agriculture. In other words, rather than a presumption cities can take action on those and other issues, the new law - which passed both chambers and is already signed by the Governor - says those cities can’t do anything unless the legislature gives specific authorization. The bill led to a unique alliance between progressive groups, including labor, faith-based, environmental, low-income advocates, and many others, but a huge business lobby using the old message frame of “one-size fits all” decided that giving construction workers water breaks, or preventing scam payday lending operators from hurting working class Texans, was too uppity and needed to be squashed. The bill could also impact environmental issues, from transportation controls on oil and gas operators, to cave protections, to water conservation efforts. The only bright spot is that many legal experts believe the bill is illegal, so expect major lawsuits in the coming months.
Specific environmental policies favored by some large cities were also addressed in other preemption legislation. First, the discussion in the City of Dallas of regulating lawn mower engines, led to a series of bills focused on not allowing cities to regulate fuels or engines. Here, our efforts focused not on stopping the bills, but on making them less bad through working with the authors and amendments. Thus, we were able to collaborate with the City of Dallas, the City of Houston, and other interested stakeholders, to significantly improve SB 1017 by Sen Brian Birdwell (R-Granbury). As originally filed, the bill would have prevented cities from taking nearly any action that could directly or indirectly regulate engines and fuel sources. The bill that passed and has been signed by Governor Abbott prevents cities from banning certain engines or operations, but continues to allow them to place some regulations, and also provide education, incentives, and programs for cleaner alternatives. Again, we ended up being neutral on these bills in return for keeping far worse bills from moving forward.
Similarly, two anti-climate bills did pass, but we made certain they will not impact city climate action plans. First, largely as a response to a charter amendment petition by voters in El Paso (which did not pass), SB 1860 by Sen. Bryan Hughes (R-Mineola), carried by Rep. Tom Craddick (R-Midland) in the House, requires that any charter amendment approved by voters involving climate change, cannot go into effect unless approved by the Legislature. Essentially, this means that efforts such as those by Sunrise El Paso to get voters to make changes to a municipal charter are essentially dead. There is little chance the Texas Legislature would ever approve a charter requiring action on climate change. While we opposed the legislation, given its likely passage, we focused on ensuring that the bill would not impact existing or future climate action plans done through normal resolution and ordinance-making authority (as opposed to charters). Similarly, another bill, SB 784 by Sen. Birdwell, makes it clear that cities can directly regulate greenhouse gas emissions. While we believe this does not prevent cities from adopting policies that reduce emissions indirectly, the bill clearly puts some limits on city authority over emissions. Again, our main focus was keeping the bill from becoming worse or more overreaching.
Other bills that preempted city action were often focused on the City of Austin, including whether they could require the set-aside of parkland for commercial development, or how Austin Energy could set future electric rates. One bill in particular, SB 853 by Sen. Kelly Hancock (R-Fort Worth) would have required Austin Energy to have to go to the PUCT after just having approved electric rates for potentially another rate case, essentially putting the City of Austin under PUCT ratemaking authority, something no other municipal utility has to do. Fortunately, not only did we work to weaken the original bill, it was set too late on the House floor to be taken up, and the bill died. Rates and hearings will continue to be a local decision. A slew of bad bills filed by former City Council-member Ellen Troxclair (R-Blanco) designed to hurt Austin Energy were either bottled up in committee or placed too late on the House floor to be taken up.
Speaking of which…
Ashe junipers survive a questionable justification by tree-cutting Ellen Troxclair
If passed, Troxclair’s HB 2239 would have allowed developers and homeowners to cut down any ashe juniper trees without seeking a local permit or paying into a tree mitigation program as is required by the City of San Antonio, the City of Austin, and many other local jurisdictions. While promoting the bill as a residential homeowner right to do what they want on their own property, Troxclair’s bill as written would have promoted cutting down trees in many areas subject to future development. While the bill passed the House, and passed out of the Local Government committee in the Senate (where it was carried by Sen. Pete Flores (R-Pleasanton)), opposition from cities, the Sierra Club, the Audubon Society, the Greater Edwards Aquifer Authority, and many others meant it never reached the Senate floor.
It also emerged that Troxclair, a real estate developer, might just have ulterior motives besides individual property rights. Indeed, a close look at her website reveals her company owns and develops property that would benefit from not having to seek permits or pay into mitigation funds. Here’s just one example! It might be time for Troxclair to file that financial statement with the Texas Ethics Commission, since she asked for an extension and never filed it.
TCEQ Sunset and other matters: some modest but important progress
One bright spot was passage of an important Sunset bill for the TCEQ . While falling short of many of the community demands to address standing, cumulative impact and environmental justice, SB 1397 by Sen. Charles Schwertner (R-Georgetown), carried in the House by Rep. Keith Bell (R-Athens), contains some very important reforms, including the potential to increase fines to $40,000 per day per violation, required online access to permit applications, increased time on certain permits to make comments or ask for contested case hearings, improved processes for environmental water flows, required best management practices for concrete batch plants, better notice to public officials, the potential for online hearings, and some community outreach requirements.
Again, the thousands of comments and hundreds of hours of testimony in public meetings during the Sunset Review process helped build a case that the “reluctant regulator” that TCEQ is known to be can start to change with passage of the bill. However, some other needed reforms did fail to gain traction.
Another good bill which has been sent to the Governor is HB 4885 - on the Texas Emissions Reduction Plan (TERP) - by Rep. Brooks Landgraft (R-Odessa) and Sen. Birdwell. This bill made some modest improvements, providing funding for new programs to reduce methane emissions, more money for assessing air quality improvements from building codes and energy efficiency implementation, as well as a new program on hydrogen trucks. While the Sierra Club does not favor burning hydrogen in trucks, hydrogen fuel-cell technology could be a positive development, and for certain long-range trucks may be an option along with electrification.
Unfortunately, despite dozens of good bills filed to better control the impacts of concrete batch plants in overburdened neighborhoods, only SB 1399 by Sen. Schwertner and Rep. Keith Bell which requires a protectiveness review every six years of concrete batch plants, was sent to the Governor’s office.
Climate and oil and gas regulation: nada
Let’s be honest. Our pollution reduction bills went NOWHERE. We worked with offices to file dozens of great bills on climate planning, emissions reductions, oil and gas regulations - whether to plug more wells, deal with climate-destroying methane emissions, or finally raise fines and fees on the oil and gas industry. Not only did they not advance, but the chairs of the relevant committees - Chair Craig Goldman (R-Fort Worth) and Chair Brian Birdwell (R-Waco) - never even allowed those bills to get hearings. Faced with climate extremes and overburdened communities, the official legislative response was to ignore it and stick our collective heads in the sand.
Okay, this is where things get nuanced and complicated. Dozens of bills were filed - some we liked, some we hated, some we tolerated - on different aspects of the electric grid, and there were some super LOOOONG hearings in both the Senate and House. We can say that there was significant action on grid issues, but we can also say they missed the most effective solution on the table: energy efficiency.
First some good news. The worst ideas such as SB 6 - which would have paid Berkshire Hathaway and others some $18 billion in ratepayer funding to build 10,000 MW of gas plants - passed the Senate but never even got a hearing in the House. Similarly, SB 624 by Sen. Lois Kolkhorst (R-Brenham), which would have made all renewable energy power plants obtain permits from the PUCT, was never taken up by the House (and an amendment on the Sunset bill to do the same was stripped out).
Similarly a bill, SB 2015, by Sen. Phil King (R-Weatherford) to require that half of all new generation in Texas be “dispatchable” - effectively preventing development of solar and wind energy - was also killed in the House. Thus, what we viewed as the most expensive and damaging proposals did not pass this session.
We want to point out that this happened in part because of you. All the calls and emails against these bills helped, as well as a strong coalition of groups, renewable energy companies, and even some of the oil and gas interests who realized how expensive and damaging these proposals would be.
Some modestly good news: It took some last minute finagling, but two great bills on the demand side were approved. First, SB 2453 (by Sen. José Menéndez (D-San Antonio)), carried by Rep. Ana Hernandez (D-Houston) in the House, will allow the State Energy Conservation Office (SECO) to move forward on adoption of the latest energy codes for new construction in buildings, and some great programs for energy and water efficiency in state-funded buildings (like state agencies and universities). It was a rollercoaster ride, but at the end of the session the bill was sent to the Governor. Fingers crossed.
In addition, a bill we supported, SB 1699 (Sen. Nathan Johnson (D-Dallas) and Rep. Todd Hunter (R-Corpus Christi)), ended up including some important changes. First, it would allow “distributed energy resources” like solar to be aggregated and compete in the energy market, and second, it was improved with the addition of a modified version of SB 114 (Menendez-Anchia), a residential demand response bill. These are good bills that should reduce stress on the grid by reducing energy use, helping customers.
Still, the bills we were most excited about - including HB 4811 (Anchia/Schwertner) that would have created a Texas Energy Efficiency Council - and SB 258 (Eckhardt/Anchia) - both failed to make it all the way through. HB 4811, which was recommended by the PUCT,- passed the House in April but was never taken up in the Senate.
Amazingly, SB 258, which would have raised the energy efficiency goals at private utilities for the first time since 2011, passed the Senate overwhelmingly, and had a great hearing in the House Committee on State Affairs. However, it never received a vote in committee. A last minute attempt by Sen. Eckhardt (D-Austin) to add the bill to the PUCT Sunset bill (HB 1500) fell on deaf ears, as Chair Schwertner, who had earlier supported the bill, voted against its inclusion, citing opposition in the House. The amendment failed 19-12. To be clear, the opposition really came from the powerful utilities themselves, who actively opposed the bill throughout, even though the programs to help consumers would be paid for through the rates. Thus, many Senators who had previously voted for the bill changed their position just a few weeks after voting in favor of it.
The Hunter preacher shout-out and final fix the grid bills are... complicated.
In the final days of session, some might have been surprised to hear Chair Todd Hunter, head of the powerful Committee on State Affairs, on the House floor put the Lone Star Chapter of the Sierra Club and the Texas Oil and Gas Association in the same sentence as supporting his version of the fix-the-grid bill. As he said, “I can’t believe I got the Sierra Club and TXOGA to both support my bill. I had to reread it and make sure I still supported it.”
But it was true both Sierra Club, most other consumer groups, and large industrial interests like TXOGA, Texas Chemical Council, and the Texas Association of Manufacturers, all supported SB 7, a bill that gave direction to the PUCT and ERCOT to add some extra services to keep the lights on, but also put “guardrails” on those services to better protect consumer costs. The bill contained an important “cap” on electric prices that basically said these extra payments to largely dispatchable (i.e., fossil fuel) generators would not increase the overall cost of our market by more than $1 billion per year. The House version of the bill would also mitigate some of the more expensive requirements of the Senate version of the bill. Indeed, throughout the legislative session, there was an unholy alliance between the Sierra Club and industrial consumers against the largest generation companies like NRG and Vistra, intent on getting an unfettered generator electric tax known as the PCM (Performance Credit Mechanism) approved.
Despite dozens of bills and much action, in the final days of session, most of those bills became incorporated into the PUCT Sunset bill: HB 1500 (Holland-Schwertner). Thus, SB 7 and other bills like SB 2012 that the Sierra Club supported never got to the Governor’s desk as they became part of a massive 50-page bill. So did we like the bill. Yes, we supported the final version of the bill even though it has some things we don’t support. That’s why they call this work sausage making!
What’s in the bill going to the Governor’s desk?
- Important PUCT transparency and public input reforms
- Important PUCT governance and ERCOT reforms
- A cost cap on market changes of $1 billion (can be adjusted for increased demand and inflation)
- A new ancillary service we support that is designed to provide power during times of uncertainty
- Requirements for multiple studies before the big generator incentive (PCM) goes into effect which likely means it can’t happen before 2027
- Improved communications requirements with the public
- Sunset of PUCT in 2029 meaning we will come back then for more analysis
There were some anti-renewable aspects to the bill thrown in largely by the Senate side, but none of these are immediate and would only apply to new development, again largely after 2026 and further study.
What about state-funded gas plants? Does that exist now?
Yes, one bill we were involved in was a much lighter version of SB 6, the terrible bill that would have cost ratepayers $18 billion to build new gas plants. Instead, the bill that passed in a last minute deal was SB 2627, along with its constitutional authorization SJR 93, which means the provisions of the bill are subject to approval by voters. Rather than $18 billion in ratepayer funds, this bill has a $5 billion set-aside in budget surplus funds, meaning no ratepayer will be paying for the plants.
Under the last-minute final version of the bill, beginning only after voter approval, some dispatchable plants - think gas, hydrogen, or even geothermal - could receive a 3% loan from the PUCT to build a power plant for up to 60% of the cost of the power plant. If they were able to complete it before 2029, they could be eligible for a bonus payment from the state. The bill and constitutional amendment also allows some funding for weatherizing or upgrading power plants outside of ERCOT, and for backup power and microgrids through a separate grant program.
Taken as a whole, Sierra Club was neutral on the bill but worked closely with Chair Hunter and others to improve the original version of the bill. Unfortunately, attempts to add storage technology to the bill fell on deaf ears, largely because of insistence by the Lt. Governor and Chair Schwertner that storage - the cleanest form of dispatchable power - not be included. A separate amendment to add energy efficiency to the bill also failed to gain traction and was withdrawn.
What about other corporate welfare?
One bill we clearly and vigorously opposed was HB 5, the continuation of the “Chapter 313” tax abatements that large manufacturing and petrochemical plants, as well as energy plants - both fossil fueled and renewables – have used to get tax abatements from school districts. That program expired and was not continued by the Legislature. HB 5 (Hunter), as it passed the House, was perhaps even worse in our view than the original program since it had little transparency, required relatively few jobs, had no required public notice, and specifically excluded renewable energy projects. A coalition of labor, faith, community, and environmental groups opposed HB 5, while big business, many school districts and local governments, strongly supported the bills. In the end, the bill easily passed the House, despite opposition from many conservative members and many Democrats.
The Senate, however, significantly rewrote the bill, making it a much smaller tax incentive, with required public notice and no potential for a so-called “kickback” that put school districts in the habit of favoring the tax abatement deals.
Hours before the deadline, a deal was reached between the House and Senate that largely followed the more limited Senate version of the bill. While Sierra Club and our allies continued to oppose the bill, without our united opposition, the bill would have been much more expansive and would not have included public transparency and tighter rules over who can apply for the tax incentive.
So to sum up…
The Texas Legislature failed to pass fundamental reform of the electric market and environmental regulation that fully protects public health and consumer’s pocketbooks, and undermined local authority through preemption bills. However, some modest bills were passed, and on the whole, the PUCT, TWDB, and TCEQ Sunset bills include some important improvements. In addition, important investments in water, parks, and other infrastructure were made. Our signature efforts on water quality protections and energy efficiency goals fell short but we are not giving up!