V&E Environmental Law Update E-communication, April 11, 2014
Amplifying the effect of the Texas Supreme Court’s recent decisions in City of Waco and Bosque, the Third Court of Appeals’ April 4 opinion in Sierra Club v. Texas Commission on Environmental Quality and Waste Control Specialists may further enhance a TCEQ permit applicant’s prospects for avoiding the costs and delays associated with contested case hearings. The Texas judiciary, it seems, is growingly comfortable with ceding to the Commission the discretion to determine when permit actions need an adjudicated record and when they do not.
Under many of Texas’s environmental permitting programs, “affected persons” — those with interests in a permit application not shared by the general public — may ask the Commission to refer a permit application to contested case hearing at the State Office of Administrative Hearings (SOAH). These trial-like proceedings culminate in an administrative law judge’s opinion regarding the application’s conformance with applicable law, which inform the Commission’s ultimate disposition of the application. In Waste Control Specialists, Sierra Club called into question the Commission’s authority to determine whether a hearing requestor is an “affected person” without referring that factual determination to SOAH. The Third Court’s answer: The Commission may make factual determinations on its own, without referral to SOAH.
TCEQ staff approved Waste Control Specialists’ (WCS) application for a license to construct a radwaste disposal facility. Unsatisfied, Sierra Club requested a contested case hearing, offering Rose Gardner and Fletcher Williams as “affected persons” to establish associational standing. According to Sierra Club, both Ms. Gardner and Mr. Williams lived or worked near the proposed facility. But the Commission denied Sierra Club’s hearing request after finding that Ms. Gardner and Mr. Williams were not “affected persons” because each lived more than three miles from the proposed site and neither had interests different from the general public.
On review, the district court upheld the Commission’s decision and denied Sierra Club’s motion to remand the case to TCEQ for the taking of additional evidence it had recently discovered. Sierra Club appealed to the Third Court.
Considerations on Appeal
Sierra Club claimed that with respect to any fact issues, such as whether Ms. Gardner and Mr. Williams were “affected persons,” it was entitled to a contested case hearing to prove its members would be affected. In other words, Sierra Club argued that once it had filed a hearing request that conformed to the Commission’s rules, the Commission had no choice but to refer to SOAH matters relating to the underlying merits of WCS’ license — e.g., the likely effects of the license on named Sierra Club members — because the Commission is without authority to resolve factual disputes on its own.
The Third Court disagreed, holding that TCEQ can weigh and resolve matters that go to the merits of an underlying application without SOAH-adjudicated facts. TCEQ’s assessment “may include reference to the permit application, attached expert reports, the analysis and opinions of professionals on its staff, and any reports, opinions, and data it has before it.”
Sierra Club also claimed that the district court should have remanded the case to the Commission in light of new evidence that allegedly proved that TCEQ personnel had reservations about WCS’ planned operations. But the Third Court held that Sierra Club’s statutory basis for remand — Texas Government Code § 2001.175(c) — only authorizes a reviewing court to remand following a contested case hearing. And because TCEQ’s evaluation of hearing requests is not a contested case hearing in and of itself, the Third Court upheld the district court’s denial of the remand motion.
Drawing in part on the Texas Supreme Court’s recent decisions in City of Waco and Bosque, the Third Court affirmed the Commission’s role as fact-finder in evaluating hearing requests: “TCEQ’s discretion over contested case hearing requests naturally includes its ‘threshold’ determination of whether the person seeking the hearing is an affected person.” And it determined that a district court’s review of the Commission’s denial of hearing requests is under a deferential “abuse of discretion” standard limited to the administrative record, such that the existence of substantial evidence in the record — such as the permit application, expert reports, and other data — will often be the dispositive factor in determining the propriety of TCEQ’s decision. Where the administrative record contains sufficient information to disqualify hearing requestors as affected persons, this opinion offers applicants renewed hope that referral of contested applications to SOAH can be avoided. Although this is a good problem for an applicant to have, it is no longer quite so easy to make the strategic decision to directly refer a contested application to SOAH to avoid the substantial time required for the Commission to consider referring hearing requests.
For more information, please contact Vinson & Elkins lawyers Eric Groten or Taylor Holcomb. Visit our website to learn more about V&E’s Environmental practice, or e-mail one of the practice contacts.