After 'wake-up call,' Texas targets pellet pollution

After a federal lawsuit in Texas last year resulted in a record $50 million settlement against Formosa Plastics Corp. for large-scale leaking of plastic pellets into waterways, state regulators there are now proposing getting tougher with rest of the industry.

The Texas Commission on Environmental Quality is considering new rules that could essentially require 155 plastic resin plants and large processing factories in the state to eliminate pellet leakage into the environment from their factories.

While the agency's plans likely won't be final until the second half of 2021, industry officials in Texas say the changes TCEQ is floating could be costly, in the millions of dollars for many plants to rework their operations.

The Texas Chemical Council said the new rules are a response to public pressure from the Formosa court case, the largest settlement in history for a citizen-initiated Clean Water Act lawsuit.

"The lawsuit and the settlement, I think, was a wake-up call to everyone in the industry," said Hector Rivero, TCC president and CEO. "It created a little bit of a stir. It probably wasn't a best practice and is not something that I think Formosa or industry is real proud of."

But Rivero said the industry wants to address the problem, regardless of what TCEQ does.

"We respect where the TCEQ is coming from and we recognize the political pressure," Rivero said. "No one wants to find plastic pellets in any open water, whether it's a river or a stream or the ocean. We don't want to see that either.

"We are embracing the fact that we want to make sure we can effectively mitigate plastic pellets and powders and flakes," he said.

It's not clear yet what specific steps state regulators will recommend. Environmental groups in Texas are also weighing in, urging TCEQ to take much tougher positions around enforcement and regulations.

TCEQ so far has only released broad outlines of what it could do. It said it plans to unveil more detailed proposed rules in April, get public comments on those and make a final decision in September 2021.

The local conservation group that brought the lawsuit against Formosa, the San Antonio Bay Estuarine Waterkeeper, said the consent decree that ended the Formosa lawsuit should be a model for TCEQ.

It includes a legally binding requirement for "zero discharge" of pellets, flakes and other plastic raw materials from factories, as well as giving Waterkeeper experts input and monitoring of Formosa's plans.

The group made detailed suggestions in writing to TCEQ, saying that its proposal should include all sizes of plastics, from microplastics to pellets; that it include material that both floats and sinks, rather than the "floating solids" standard in current TCEQ rules; and that zero discharge rules apply to both industrial wastewater discharges and stormwater runoff.

Waterkeeper, which made its filing jointly with the Center for Biological Diversity, asked for TCEQ to require much more monitoring and have firms publicly report discharges.

The Sierra Club chapter in Texas said new rules need to be combined with stronger enforcement, saying that could have avoided the problems at Formosa.

"Devoting staff resources to inspections and enforcement if violations are found would go a long way to avoiding future problems," said Cyrus Reed, conservation director of the Sierra Club's Lone Star Chapter in Austin. "The well-documented problems with the Formosa Plastics Point Comfort Petrochemical Complex has been a serious issue."

The Sierra Club also urged Texas to give companies only one year to comply with any new rules, instead of a three-year compliance period TCEQ said is part of current Texas standards.

While TCEQ rules are about what happens in the future, the Formosa case still casts a long shadow.

Environmental groups used it to argue that TCEQ's enforcement isn't strong enough and urged the agency to levy much bigger fines.

In January 2019, TCEQ fined Formosa $121,000 after investigating a handful of pellet leakage violations.

But during a trial a few months later in federal court in Victoria, Texas, Waterkeeper and other groups presented detailed records of what they said were more than 1,000 violations cataloged over several years. They estimated penalties under federal law could top $160 million.

The U.S. District Court judge hearing the case ruled in favor of Waterkeeper in June 2019, calling Formosa a "serial offender" and writing that "the violations are enormous." That led the parties to announce their $50 million settlement in October.

Both Waterkeeper and the Surfrider Foundation said TCEQ penalties need to be large enough to deter future violations.

Waterkeeper argued that penalties of between $100,000 and $200,000 are "inconsequential" for a company the size of Formosa, which it said had hundreds of millions worth of profits during the period of the litigation.

"Waterkeeper's experience with the agency's enforcement process during the Formosa litigation was disheartening," the group said.

But TCC's Rivero argued that regardless of fines — and he said a $100,000 fine is a major penalty — compliance is "extremely important to plant managers and workers, as well as the CEO and the shareholders of a company."

"The vast majority of the companies that we're talking about are really responsible companies," he said. "They have shareholders who hold them accountable, period."

He said the situation at Formosa is not the norm.

"The Formosa example is the exception, it's not the norm," he said.

Companies need time to identify the best technology to contain and capture pellets, Rivero said. The industry is essentially seeing the agency propose to regulate pellets, which he said were nonhazardous, as a hazardous material, he said.

"We need time to make sure that we can identify the appropriate technology and implement and install newly designed containment strategies to be able to have a zero tolerance," he said. "To literally ensure that we're capturing every pellet manufactured at a plant. That's a little bit more of a daunting challenge that doesn't just happen overnight."

Newer facilities being built today are already thinking about these problems and are putting in repetitive systems to capture pellets, he said, but for older plants, he compared it to retrofitting an automobile assembly line.

It can be expensive. TCC General Counsel Sam Gammage estimated that Formosa has spent "tens of millions of dollars" improving its plant for pellet containment as a result of the settlement: "They're required to put on a ton of controls."

TCC argued that TCEQ should have flexibility in its rules statewide.

"Every one of these facilities is different. Some are surrounded by other facilities, and some are out on their own on the coastline with nobody anywhere near them," Gammage said. "One of our hopes is that the agency is not too prescriptive in what they require in their best management plans."

The industry and environmental groups also disagreed over some of the more subtle risks from pellets in the environment.

Environmental groups argued that beyond causing litter and pollution, research shows that toxic chemicals like mercury, cadmium and lead can attach themselves, or sorb, to plastic nurdles.

Waterkeeper, for example, presented evidence from a Texas A&M University-Corpus Christi scientist who found that pellets in Lavaca Bay near the Formosa site contained mercury. Part of the bay is a mercury superfund site because of previous discharges from an Alcoa plant, Waterkeeper said.

Given that many plastics plants are located in industrial corridors near other factories or refining plants, Waterkeeper said that "this sorption characteristic of preproduction plastics presents an extra basis for concern about the discharge of plastics."

But TCC said that plastic pellets by themselves are not hazardous.

"One of the very important points in this discussion, we have to recognize that plastic pellets by themselves are not hazardous, and they have not been regulated as a hazardous substance," Rivero said. "There has not been anything illegal about de minimis discharge of plastic pellets."

The environmental groups also highlighted what they said is new technology TCEQ should employ: equipment that can identify "fingerprints" for resin pellets from a specific company, to help with enforcement and better determine which companies are the source of plastic material found in the state's waters.

Waterkeeper said that during the Formosa court case, the resin maker used a version of that technology to argue that some of the pellets found in waters around its Point Comfort factory were not, in fact, Formosa materials.

The environmental groups said that labs at the University of Texas Marine Science Institute and at the Texas A&M University campus in Corpus Christi have similar equipment.

The Surfrider Foundation urged TCEQ to use that technology in its regulatory regime and said it could benefit companies that are careful with pellet containment.

"TCEQ should require all plastics manufacturers to submit examples of the plastics made at their facilities to enable identification of discharged or released plastics during an enforcement investigation," Surfrider said. "This would increase the reliability of the fingerprinting tool and level the playing field for the careful producers."

Surfrider submitted its comments with 13 other groups, including the Plastic Pollution Coalition, the Texas Campaign for the Environment and Texans for Clean Water.

For now, the industry and interested groups are waiting for the TCEQ to come out with a more detailed proposal, which is being done as part of its broader revision of the state's surface water standards.

The rules around pellet leakage would only directly apply to the 155 plastics companies in the state with individual permits under what's called the Texas pollutant discharge elimination system and may not include all of the state's smaller processing factories.

But it clearly reflects stepped-up activity around pellet containment on the part of government, industry and conservation groups.

TCEQ noted in documents that its current rules already formally ban pellet discharges, but they're proposing putting much more focus on it, requiring specific management plans and giving more guidance to individual agency investigators.

Some groups urged that the industry's Operation Clean Sweep program could be incorporated into those management plans, but new legally enforceable rules would likely go well beyond that voluntary program.

There's also been a push by some of the same environmental groups for national regulations around zero discharge of pellets.

The Center for Biological Diversity and more than 200 other groups last year formally petitioned the Environmental Protection Agency for tougher federal rules as part of the Clean Water Act. And a handful of court cases against individual companies in other states have been filed by environmental groups in recent years.