ACCEPTED
03-14-00667-CV
4457253
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/11/2015 1:30:00 PM
JEFFREY D. KYLE
CLERK
NO. 03-14-00667-CV
FILED IN
IN THE COURT OF APPEALS 3rd COURT OF APPEALS
FOR THE THIRD DISTRICT OF TEXAS AUSTIN, TEXAS
AT AUSTIN 3/11/2015 1:30:00 PM
JEFFREY D. KYLE
Clerk
TEXAS COMMISSION ON ENVIRONMENTAL QUALITY,
Appellant,
v.
EXXON MOBIL CORPORATION, EXXONMOBIL OIL CORPORATION, PENNZOIL-QUAKER
STATE COMPANY, AND SHELL OIL COMPANY,
Appellees.
APPELLEES’ SURREPLY BRIEF
John R. Eldridge
State Bar No. 06513520
john.eldridge@haynesboone.com
Kent Rutter
State Bar No. 00797364
kent.rutter@haynesboone.com
Adam Sencenbaugh
State Bar No. 24060584
adam.sencenbaugh@haynesboone.com
HAYNES AND BOONE, LLP
1221 McKinney Street, Suite 2100
Houston, Texas 77010
Telephone: (713) 547-2000
Telecopier: (713) 547-2600
ATTORNEYS FOR APPELLEES
ORAL ARGUMENT REQUESTED
Not until the State filed its Reply did it set forth the full basis for its appeal.
The State’s opening brief merely sketched the basics of its appellate argument,
leaving much of the substance for its Reply. The State’s Reply exceeded the length
of the opening brief by nearly 800 words and introduced new arguments,
authorities, and theories in support of the State’s appeal. ExxonMobil and Shell
therefore submit the following as a limited surreply.
A. The Legislature has waived sovereign immunity to review the AO
under § 361.322.
The State’s principal argument in reply rests on a misunderstanding of
ExxonMobil and Shell’s response. ExxonMobil and Shell do not argue that the
TCEQ can “waive, agree to, or confer jurisdiction” when it otherwise does not
exist. (Appellant’s Reply Brief at 21.) What the State can do—and what it did
through issuance of the AO for the Voda Site—is invoke its powers under the
SWDA to issue an administrative order for which the Legislature has already
enacted a “clear and unambiguous” waiver of sovereign immunity. Tex. Natural
Res. Conserv. Comm’n v. IT-Davy, 74 S.W.3d 849, 853-54 (Tex. 2002).
The SWDA empowers the TCEQ to issue Superfund orders pursuant to
§ 361.188, § 361.272, or both, and the structure of the SWDA provides that a
person subject to any of these Superfund orders may appeal to district court under
§ 361.322. Even the State acknowledges that § 361.322 is an unequivocal waiver
of sovereign immunity. (Appellant’s Reply Brief at 30.) Because the TCEQ issued
a Superfund order under the SWDA seeking response costs from ExxonMobil and
Shell, ExxonMobil and Shell may appeal under § 361.322.
B. The State’s argument that the SWDA creates mutually exclusive
orders rests on a logical fallacy.
The State reasons that if the Legislature intended to create mutually
exclusive Superfund orders under § 361.188 and § 361.272, then it would have
created two appellate provisions under the SWDA. Because the Legislature did so,
the State argues, § 361.188 and § 361.272 orders must be mutually exclusive.
This argument is based on a logical fallacy. The flaw in the argument is that
a Legislative intent to create mutually exclusive Superfund orders is not the only
possible reason the Legislature would create two appellate provisions. Thus, even
if the State’s premises are true, its conclusion does not follow.
A classic example of this fallacy helps to illustrate the point. Suppose one
were to argue as follows: (1) if Bill Gates owns Fort Knox, then he is rich; (2) Bill
Gates is rich; (3) therefore, Bill Gates owns Fort Knox. Even if both the first and
second premises are true, the conclusion does not follow, for much the same reason
that the State’s conclusion does not follow here: owning Fort Knox is not the only
possible explanation for why Bill Gates is rich.
Setting aside the State’s flawed logic, the fact is that nothing in the SWDA
states that § 361.188 and § 361.272 orders are mutually exclusive, and despite the
distinct appellate provisions there is no reason why they must be mutually
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exclusive. Until the State decided late in this case to advance its expedient
argument, the State never believed the two types of orders were mutually exclusive
either, as it stated on many occasions.
C. The State misconstrues the definition of “person affected,” which
limits standing for parties under § 361.321.
The State acknowledges that § 361.321 is limited to a “person affected”
under the statute, which restricts the class of potential appellants to those with a
specific geographic tie to a solid waste facility and sufficient economic injury. But
the State glosses over these limitations and suggests that “[i]n context, this
definition is broad enough to encompass persons named in Superfund orders.”
(Appellant’s Reply Brief at 14.) That assertion might allow the State’s desired
conclusion to trump a plain reading of the text and an honest assessment of
Legislative intent. Moreover, the State ignores that the definition of “person
affected” has a temporal component, which limits the class to those with a
geographic tie to the county “in which a solid waste facility is to be located.” Tex.
Health & Safety Code Ann. § 361.303(24) (West 2010) (emphasis added). There is
no reason to believe the Legislature intended to limit appeals from Superfund
orders to persons residing or doing business in counties where solid waste facilities
would be built in the future. Beyond its clear limitation for standing, the definition
reflects a Legislative intent to tie this appellate provision to prospective solid waste
permits, not the Superfund program.
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D. The language of the AO and the actions of the TCEQ reflect an
unmistakable intent to issue an order under both § 361.188 and
§ 361.272.
In construing orders of an administrative agency, this Court will “apply the
same rules as when [it] interprets statutes; the ultimate object of construction is to
ascertain the intent of the administrative body.” Office of the Pub. Util. Counsel v.
Texas-New Mexico Power Co., 344 S.W.3d 446, 450-51 (Tex. App.—Austin 2011,
pet. denied). When construing statutes, courts “ascertain and give effect to the
Legislature’s intent as expressed by the language of the statute.” City of Rockwall
v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008).
The State dismisses Section I of the AO—expressing the TCEQ’s intent to
invoke both § 361.188 and § 361.272—as merely “boilerplate language” from the
“preamble” that is not “controlling or dispositive.” (Appellant’s Reply Brief at 29.)
But as the Texas Supreme Court has emphasized, “[i]t is presumed the entire
statute is intended to be effective” and therefore the court should not read a word,
phrase, or sentence to be useless or a nullity. Meritor Auto., Inc. v. Ruan Leasing
Co., 44 S.W.3d 86, 89–90 (Tex. 2001). The opening paragraph of the AO is not a
meaningless “preamble” and is no more “boilerplate” than any other provision of
the Order. Instead, it is an unmistakable expression of the TCEQ’s intent in issuing
the AO, and there is no basis for the Court to disregard it. To the extent the State
attempts to dismiss the formal invocation of § 361.272 on the ground that it is
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contained in AO paragraph “I. Introduction,” that theory is defeated by AO
paragraph XXVIII, which provides that section headings are for convenience and
“will be disregarded in the construction and interpretation of any of the provisions
of this AO.” (CR:87.)
The State asks the Court to ignore the actual text of the AO, the
circumstances of its issuance, and the unequivocal descriptions it offered of the AO
for years after its issuance, including its pleadings in this case. Instead, the State
suggests, the Court should focus exclusively on the AO’s “essential nature” and
conclude that it was issued solely under § 361.188 simply because the TCEQ
purportedly followed the listing procedures of § 361.181 through § 361.188.
(Appellant’s Reply Brief at 17.) But the proper classification of an order does not
turn on whether the TCEQ followed particular listing procedures. For example, the
State surely would not argue that if the TCEQ failed to satisfy one of the
procedures of Subchapter F—e.g., by neglecting to publish notice in the Texas
Register—that a § 361.188 order would somehow convert to a § 361.272 order that
would be subject to appellate review under § 361.322.
Finally, the State argues that the AO must have been issued solely under
§ 361.188 because it contains all the constituent parts of § 361.188 order. But this
is another version of the same fallacy discussed above. Using the same logic,
because the AO contains all of the elements of a § 361.272 order, one could just as
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easily conclude that the AO was issued solely under § 361.272, not § 361.188. The
State’s efforts to rewrite the history of the Order are unavailing.
E. Judicial review of the AO under § 361.322 would not be
redundant.
The State asserts in Reply that review under § 361.322 would be
“redundant” because the TCEQ would not go through the “elaborate, time-
consuming, and expensive Subchapter F process if it had to re-prove liability at
trial by a preponderance of the evidence anyway.” (Appellant’s Reply Brief at 26.)
But the Subchapter F process does not “prove liability” by a preponderance of
evidence to anyone—it merely identifies parties the TCEQ believes are responsible
simply because their names appeared on records associated with the site. Liability
is not proven to a neutral third-party or even to a hearings examiner affiliated with
the TCEQ. In the absence of any hearing before the agency, judicial review under
§ 361.322 is not redundant of anything.
The State further suggests that it drew on its own “expertise” in identifying
the PRPs for the Voda Site, so the Court should be confident that the rights of
named PRPs were sufficiently protected. But as this Court has recognized when
faced with similar arguments, “expertness is not a magic wand which can be
waved over the corpus of an agency’s findings to preserve them from judicial
review.” Lamb County Elec. Co-op, Inc. v. Pub. Util. Comm’n, No. 03-00-00113-
CV, 2001 WL 23142, at *7 (Tex. App.—Austin Jan. 11, 2001, no pet.) (not
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designated for publication). The TCEQ has no particular expertise in identifying
PRPs and no incentive to limit the PRPs listed in an administrative order. The AO
mentions nothing about the statutory defenses to liability being considered or
rejected.
F. City of Waco does not authorize the TCEQ to make decisions on
the merits without robust judicial review.
The State argues in Reply that City of Waco was more than a mere
“threshold determination” and was instead based “on the substance of the
applications.” (Appellant’s Reply Brief at 38.) Making a logical leap, the State then
concludes that the TCEQ made “a similar determination respecting the Site remedy
and Appellees’ status as PRP’s [sic]” in this case. (Appellant’s Reply Brief at 36.)
Therefore, the State argues, City of Waco must “define the proper approach here.”
(Appellant’s Reply Brief at 35.)
The State misreads City of Waco. Although the agency in City of Waco
examined issues that went to the merits of the application, it did not decide the
merits—instead, it determined only whether the applicable third party was an
“affected person” who was entitled to intervene. It was this decision, not a decision
on the merits, that was held to be within the TCEQ’s discretion. As this Court
recently summarized:
TCEQ’s discretion over contested-case hearing requests naturally
includes its “threshold” determination of whether the person seeking
the hearing is an affected person. See City of Waco, 413 S.W.3d at
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410, 417. And in making that particular decision, TCEQ enjoys the
discretion to weigh and resolve matters that may go to the merits of
the underlying application, including the likely impact the regulated
activity—here, under-ground disposal of by-product material—will
have on the health, safety, and use of property by the hearing
requestor and on the use of natural resources.
Sierra Club v. Texas Comm’n on Envtl. Quality, No. 03-11-00102-CV, 2014 WL
7463875, at *5 (Tex. App.—Austin Dec. 30, 2014, no pet. h.) (emphasis added).
In contrast, the TCEQ’s decision to issue an AO imposing liability on
ExxonMobil and Shell was not a threshold determination, but a final decision on
the merits. The State now seeks to expand the City of Waco holding so that its
limited exception swallows the rule, granting the TCEQ power to make final
decisions on the merits without affording the potentially responsible party a
contested case hearing. Neither City of Waco nor its limited progeny support such a
broad interpretation.
CONCLUSION
The State spent four years telling everyone who would listen that the TCEQ
issued an administrative order for the Voda Site under both § 361.188 and
§ 361.272. Its recent attempts to erase that history are perplexing. The State
provides a half-hearted explanation for its about-face when it states: “Prior to the
Supreme Court’s opinion in City of Waco…[t]he parties believed that, if the matter
were appealed, some judicial fact-finding was inevitable in the trial court.”
(Appellant’s Reply Brief at 19.) In other words, the TCEQ fully intended to invoke
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its broadest powers under the AO and saw no procedural downside in doing so,
believing that the trial court would review the AO under the preponderance of the
evidence standard regardless.
But after City of Waco, the State mistakenly concluded that a Superfund
order issued purely under § 361.188 could be shielded from scrutiny during either
a contested case hearing at the agency or a trial at the district court. The State’s
problem is that the TCEQ never intended to issue an order for the Voda Site solely
under § 361.188. Undaunted, the State acted on its misguided belief and pursued
its bizarre and disingenuous plan to disavow virtually everything it said and did
with respect to the Voda AO before the Supreme Court’s decision in City of Waco.
The SWDA requires that appeals of Superfund orders come under
§ 361.322. Moreover, the State’s desperate attempt to recast the Voda AO as a
purely § 361.188 order is contradicted by the language, structure, and history of the
AO. Therefore, Appellees request that this Court affirm the trial court’s order
denying the State’s Plea to the Jurisdiction, or in the alternative, overturn the Order
as a violation of the TCEQ’s power under the SWDA.
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Dated: March 9, 2015.
Respectfully submitted,
/s/ John Eldridge
John R. Eldridge
State Bar No. 06513520
john.eldridge@haynesboone.com
Kent G. Rutter
State Bar No. 00797364
kent.rutter@haynesboone.com
HAYNES AND BOONE, LLP
1221 McKinney Street, Suite 2100
Houston, Texas 77010-2007
Telephone: (713) 547-2000
Telecopier: (713) 547-2600
Adam H. Sencenbaugh
State Bar No. 24060584
adam.sencenbaugh@haynesboone.com
HAYNES AND BOONE, LLP
600 Congress Avenue, Suite 1300
Austin, Texas 78701
Telephone: (512) 867-8489
Telecopier: (512) 867-8606
ATTORNEYS FOR APPELLEES EXXON
MOBIL CORPORATION, EXXONMOBIL
OIL CORPORATION, PENNZOIL-
QUAKER STATE COMPANY, AND
SHELL OIL COMPANY
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CERTIFICATE OF COMPLIANCE
TEX. R. APP. P. 9.4(i)(3)
I hereby certify that this Brief contains a total of 2,237 words, excluding the
parts of the brief exempted under TEX. R. APP. P. 9.4(i)(1), as verified by Microsoft
Word 2010. This Brief is therefore in compliance with TEX. R. APP. P. 9.4(i)(2).
/s/ Adam Sencenbaugh
Adam Sencenbaugh
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CERTIFICATE OF SERVICE
In accordance with the Texas Rules of Appellate Procedure, I certify that a
true and correct copy of the Appellees’ Surreply Brief was served by electronic
service on the following parties or attorneys of record on this 9th day of March,
2015:
Attorneys Parties
Thomas H. Edwards Texas Commission on Environmental
Quality
Craig J. Pritzlaff
Linda Secord
Assistant Attorney General
Office of the Attorney General
Environmental Protection Division
P. O. Box 12548, Capitol Station
Austin, TX 78711-2548
NON PARTIES TO APPEAL:
Janessa M. Glenn Cabot Norit Americas, Inc.
R. Steven Morton
MOLTZ MORTON & GLENN, LLP
5113 Southwest Parkway, Suite 120
Austin, TX 78735-8969
John E. Leslie Howard Freilich/ d/b/a Quick Stop
JOHN LESLIE | PLLC Brake and Muffler
1216 Florida Dr., Suite 140
Arlington, TX 76015-2393
Cynthia J. Bishop Baxter Oil Service
C BISHOP LAW PC
P. O. Box 612994
Dallas, TX 75261-2994
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Paul Craig Laird II Frank Kosar, d/b/a Rite Way Truck Rental
ASHLEY & LAIRD, L.C.
800 W. Airport Fwy., Suite 880
Irving, TX 75062-6274
Billy D. Cox Billy D. Cox Truck Leasing, Inc.
128 Red Oak Ln.
Flower Mound, TX 75028-3501
David F. Zalkovsky, Agent Central Transfer & Storage Co.
11302 Ferndale Rd.
Dallas, TX 75238-1020
George E. Kuehn SBC Holdings, Inc., f/k/a The Stroh
BUTZEL LONG Brewery Company
301 E. Liberty St., Suite 500
Ann Arbor, MI 48102-2283
/s/ Adam Sencenbaugh
Adam Sencenbaugh
15058673_1
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