ACCEPTED
03-12-00335-CV
3775299
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/14/2015 11:56:53 PM
JEFFREY D. KYLE
CLERK
No. 03-12-00335-CV
FILED IN
IN THE THIRD COURT OF APPEALS 3rd COURT OF APPEALS
AUSTIN, TEXAS AUSTIN, TEXAS
1/14/2015 11:56:53 PM
JEFFREY D. KYLE
Clerk
THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY AND
WASTE CONTROL SPECIALISTS, LLC,
Appellants
v.
Sierra Club,
Appellee
On appeal from the 98th Judicial District Court
Travis County, Texas
Cause No. D-1-GN-09-000894
APPELEE’S MOTION FOR REHEARING EN BANC
Marisa Perales
State Bar No. 24002750
FREDERICK, PERALES,
ALLMON & ROCKWELL, P.C.
707 Rio Grande, Suite 200
Austin, Texas 78701
Telephone (512) 469-6000
Facsimile (512) 482-9346
marisa@lf-lawfirm.com
COUNSEL FOR SIERRA
CLUB
January 14, 2015
TO THE HONORABLE JUSTICES OF THE THIRD COURT OF APPEALS:
Appellee Sierra Club submits this motion for rehearing en banc.1 See Tex. R.
App. P. 49.5 & 49.7. In support, Sierra Club respectfully offers the following:
I. Summary of Argument
Although the Court modified its original opinion in this case to address some of
the citation errors, the Court’s modified opinion continues to raise concerns
regarding the standard of review to be applied to an agency decision denying a
request for a contested case hearing, particularly when no opportunity to develop
an evidentiary record has been afforded the hearing requestor.
In affirming the Commission’s decision in this case, the Court employed a
substantial evidence standard of review, looking to the record for some information
that supports the agency’s decision and granting significant deference to that
decision. In doing so, the Court has essentially decided that constitutional standing
analysis has no place in administrative law proceedings.
The Court cites to Texas Commission on Environmental Quality v. City of
Waco, 413 S.W.3d 409 (Tex. 2013), and Texas Commission on Environmental
1
Because this Court’s decision and analysis in this case is similar to the one reached in
Sierra Club v. Texas Commission on Environmental Quality, No. 03-11-00102-CV (Tex. App.—
Austin, Dec. 30, 2014, no pet. h.) (the “by-product waste” case), and the potential impact of the
two decisions is similar, the arguments presented in this Motion for Rehearing En Banc are
similar to the ones presented in Sierra Club’s Motion for Rehearing En Banc, filed on this same
day, in the by-product waste case.
1
Quality v. Bosque River Coalition, 413 S.W.3d 403 (Tex. 2013) in support of this
proposition. But the Court reads too much into those decisions. Those decisions
did not do away with constitutional standing law, as explained more fully below;
nor did they adopt a substantial evidence standard of review, when no opportunity
to develop the evidence has been provided.
The inevitable result of this Court’s decision, if it is not revised, is that virtually
no hearing requestor will ever qualify as an affected person, under the Court’s new
analysis.
II. This Court’s decision allows TCEQ to deny standing to almost any
hearing requestor, based on information presented by TCEQ’s staff and
the permit applicant, and hearing requestors are left with no
meaningful legal recourse.
In reaching its decision affirming TCEQ’s denial of Sierra Club’s hearing
request, this Court conducted a substantial evidence review of the administrative
record. The Court explained that the information contained in the administrative
record and available to the commissioners—i.e., the Executive Director’s response
to hearing requests, WCS’s application, and the environmental analysis—provides
a reasonable basis for TCEQ’s decision. Slip op. at 11 & 19. But see, e.g., 30 Tex.
Admin. Code § 55.211(b) (listing the information—response to comments,
requests for reconsideration, and requests for contested case hearing—TCEQ may
consider in evaluating hearing requests for certain applications). Thus, the Court
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concluded that a reasonable basis exists supporting TCEQ’s determination that
Sierra Club’s members were not likely to be impacted by the facility and therefore
were not affected persons. Id.
This Court’s analysis—searching the record for some basis to support the
agency’s denial of a hearing request—creates an insurmountable burden for
hearing requestors seeking status as affected persons entitled to a contested case
hearing. TCEQ’s application review process ensures that the administrative record
will always include some information that supports issuing the requested license or
permit and denying any hearing requests, particularly if, as this Court suggests, the
reviewing court may assume that the Commission’s decision relied on all materials
included in the record (a record that is developed by TCEQ). Thus, if a hearing
requestor seeks to challenge TCEQ’s denial of its hearing request, via the court
system, TCEQ will always be able to point to some information in the record that
supports its decision. And because the hearing requestor is provided with no
opportunity to develop evidence of its own (and no notice that it is required to
present evidence of its own, refuting TCEQ staff’s and WCS’s assertions), the
record is unlikely to include the requisite evidence necessary for a party
challenging TCEQ’s decision to overcome the substantial evidentiary burden that
this Court has adopted.
3
To be sure, before the hearing request period commences at TCEQ, the
Executive Director’s staff must first ensure that the license or permit application is
administratively and technically complete. That is, the staff must have first
reviewed all of the technical information included in the application and made an
initial determination that the application complies with all statutory and regulatory
requirements. See 30 Tex. Admin. Code § 281.21. Staff then prepares a draft
permit. Id. § 281.21(b) (executive director shall prepare draft permit consistent
with all applicable commission rules unless recommendation is made not to grant
application). Thus, the Executive Director’s draft permit invariably includes a
recommendation that it be issued because it complies with applicable requirements,
which carries an assumption that operation of the permitted facility is not likely to
adversely impact human health and the environment, if the facility is operated in
accordance with the recommended permit terms.
The Commission considers hearing requests only after a draft permit is
prepared.2 Thus, by the time one is provided with the opportunity to request a
contested case hearing, the administrative record already includes information
supporting issuance of the requested license or permit. Further, after a hearing
2
The Commission considers these hearing requests at a public meeting, not a public
hearing. But see slip op. at 6 & n.7. Further, it is TCEQ’s chief clerk who schedules the hearing
requests for consideration at a public meeting, not the Executive Director. See 30 Tex. Admin.
Code § 55.254(c)(2). But see slip op. at 10, n. 10.
4
request has been submitted, the applicant has an opportunity to add to the
administrative record information in support of issuance of the requested permit
and denial of the hearing request, ensuring that there is some information in the
administrative record to support permit issuance and denial of hearing requests.
By focusing only on whether there is substantial information in the record that
supports TCEQ’s decision, this Court has delegated complete discretion to TCEQ
to deny hearing requests, leaving affected persons with practically no meaningful
legal recourse to challenge the denial of their hearing request. This is an
unprecedented decision that will undoubtedly affect a variety of persons with
legally protected interests who seek to protect their property rights by challenging
a permit that could adversely impact those rights, via an evidentiary contested-case
hearing.
III. The Court’s opinion avoids reviewing whether TCEQ employed the
correct standing analysis in reaching its decision to deny Sierra Club’s
request for an evidentiary hearing.
In relying on the substantial evidence standard of review in this case, the Court
neglects to examine whether the agency applied the appropriate analysis in
reaching its “standing” decision. Indeed, the Court, in essence, has determined that
TCEQ need not apply a constitutional standing analysis in determining whether a
hearing requestor is entitled to a contested case hearing.
5
And by searching the record for only some evidence to support the agency’s
decision—a record that cannot even be considered an “evidentiary” record,
because no tribunal was convened to determine whether the documentary
information offered is sufficiently reliable to be considered “evidence”—the Court
wholly avoids the question of whether the appropriate analysis was employed by
the agency in reaching its decision. The Court has essentially ceded to the agency
the basic judicial function of determining what analysis to apply when examining
whether one has standing to participate in a trial-like procedure to ensure the
protection of his or her health, property, and the environment. And, as
demonstrated by the facts of this case, TCEQ has elected not to apply a
constitutional standing analysis; it has instead simply relied on statements included
in legal briefs submitted by TCEQ’s staff attorney and WCS’s attorney, assuring
that the license will not adversely impact anyone, no matter how close they may
reside to the facility.
There is no indication that the Legislature intended to vest the agency with the
discretion to essentially apply an arbitrary standard to determine whether a hearing
requestor has standing to participate in a hearing, without any meaningful
opportunity for review. See Tex. Gov’t Code § 2001.174 (setting out 6 different
bases for reversing an agency decision, including whether the decision violated a
constitutional provision, was made through unlawful procedure, was affected by
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other error of law, or was arbitrary and capricious). TCEQ’s own rules do not
support such a proposition. See, e.g., 30 Tex. Admin. Code § 55.211(b)(4)
(allowing Commission to refer hearing request to SOAH for evidentiary hearing on
issue of whether requestor is affected person); (d)(1) (allowing Commission to
refer application to SOAH for hearing if in public’s interest to do so). And the
Supreme Court’s decisions in City of Waco and Bosque River Coalition certainly
never went this far.
To be clear, the Court is not being asked, in this case, to determine whether the
agency made the correct decision in granting WCS a license. Rather, the Court is
being asked to consider whether the agency may deny a contested case hearing to
individuals who live less than 5 miles from a radioactive waste disposal facility.
Had a contested case hearing been convened, and had the agency issued a license
to WCS at the end of that hearing, the district court and this Court may very well
have determined that such a decision was supported by the evidence in the
record—a record that was created, in part, by those affected by the agency’s
decision. But, in this case, Sierra Club’s members were not even provided an
opportunity to contribute to an evidentiary record or to vet the information that
WCS and TCEQ contributed to the record. No tribunal—not the agency, not
SOAH, and not this Court—has had an opportunity to even determine whether the
information in the record is reliable and should be considered “evidence.”
7
In short, TCEQ’s decision was based on an arbitrary standing analysis and an
arbitrary evidentiary burden. By applying a substantial evidence standard of
review, however, this Court avoids reaching the issue of whether TCEQ’s legal
analyses were proper.
IV. Neither City of Waco nor Bosque River Coalition supports the Court’s
decision in this case.
The supreme court’s opinions in City of Waco and Bosque River Coalition
simply do not control the issues presented in this case.
In City of Waco, this Court and the Supreme Court were presented with the
issue of whether TCEQ erred in denying the City of Waco’s hearing request
opposing O-Kee Dairy’s application to amend a discharge permit. The application
was governed by Chapter 26 of the Water Code, and the hearing request
determination was governed by Chapter 5 of the Water Code.
This Court determined that TCEQ erred in denying the City of Waco’s hearing
request; the Court reasoned that the substantial evidence standard of review did not
apply where no evidentiary hearing took place. City of Waco v. Texas Commission
on Environmental Quality, 346 S.W.3d 781, 819 (Tex. App.—Austin 2011), rev’d
on other grounds, 413 S.W.3d 409 (Tex. 2013). Instead, the Court applied a
constitutional standing analysis and determined that the agency erred in resolving
questions of fact against the City of Waco without first providing the City an
8
opportunity to present evidence during an evidentiary hearing, particularly where
the fact questions involve both standing and the merits of the application. Id. at
824-25.
At the Supreme Court, the parties zealously argued over the proper standard of
review to be applied to TCEQ decisions denying a hearing requestor a contested
case hearing. Several amici weighed in on this issue, as well, providing additional
perspectives on the proper standard to be applied by reviewing courts tasked with
reviewing the Commission’s denial of a hearing request.
Yet, ultimately, the Supreme Court elected not to reach this issue. The court
instead focused on whether a legal right to a contested case hearing even existed
with regard to the specific type of application at issue in the case: “[E]ven
assuming the City might otherwise qualify as an affected person under the statute’s
definition, it may still not be entitled to a public hearing if section 26.028(d)’s
exception reasonably applies.”3 City of Waco, 413 S.W.3d at 420; see also id. at
424 (noting that Section 26.028(d) allows Commission to approve application to
renew or amend permit at regular meeting without necessity of holding a public
hearing). But see slip op. at 10-11 (explaining that supreme court in City of Waco
3
The exception to which the Court referred, found in Section 26.028(d), exempts from
the public hearing requirement applications to amend or renew a water quality permit that does
not seek either to increase significantly the quantity of waste authorized to be discharged if the
activities to be authorized will maintain or improve the quality of waste authorized to be
discharged and meet certain other requirements. City of Waco, 413 S.W.3d at 419 (quoting Tex.
Water Code § 26.028(d) &citing 30 Tex. Admin. Code § 55.201(i)(5)).
9
case “reviewed TCEQ’s decisions to deny the hearing requests for an abuse of
discretion”).
The Supreme Court thus focused its analysis on whether the Commission
properly exercised its discretion to deny a public hearing on an amended permit
that maintains or improves the quality of the discharge and that neither increases
significantly the quantity of waste authorized to be discharged nor changes
materially the pattern or place of discharge. Id at 420. “The issue [] is whether the
City has a statutory right to intervene in the permitting process and obtain a
contested case hearing under the Administrative Procedure Act.” Id. at 423.
Ultimately, the Supreme Court determined that there was no legal right to a
contested case hearing in the City of Waco and Bosque River Coalition cases,
because an exception to the right to a public hearing applied in those cases, under
Section 26.028(d) of the Water Code. Consequently, the Court never reached the
issue of whether the City of Waco or Bosque River Coalition was an affected
person. But see slip op. at 10-11.
Unlike in City of Waco and Bosque River Coalition, there is no exception to the
right to a public hearing that applies in this case. And so, neither case supports this
Court’s decision in this docket.
It is worth noting that in reaching its decision in City of Waco, the Supreme
Court distinguished other cases decided by this Court that focused on “the
10
requestor’s status as an affected person” without otherwise considering “the
person’s statutory right to a hearing or statutory exceptions to that right.” City of
Waco, 413 S.W.3d at 424 (citing United Copper, Indus., Inc. v. Grissom, 17
S.W.3d 797 (Tex. App.—Austin 2000, pet. dism’d), and Heat Energy Advanced
Tech., Inc. v. West Dallas Coal. for Envtl. Justice, 962 S.W.2d 288 (Tex. App.—
Austin 1998, pet. denied)). The Supreme Court held that Grissom and Heat did not
apply in the City of Waco case because those cases focused on “affected party”
analysis, where an opportunity for a hearing is required by statute.
There is common sense to creating this public hearing exemption under Water
Code Section 26.028(d) for minor amendments or renewals of discharge permits
versus an initial application for a new discharge permit, or as in this case, an initial
application for a new low-level radioactive waste disposal facility. The distinction
between a permit amendment that improves environmental protections and a new
permit for a brand new disposal facility is a significant one. Certainly, Sierra
Club’s members Ms. Gardner and Ms. Williams are at greater risk of harm because
of the new WCS facility—however slight one views that harm to be—than they
were prior to the advent of the facility.
Low-level radioactive waste is a potential ground water pollutant that can move
in multiple directions, depending upon faults and fractures and the different
directions of flow within complex aquifers. Additionally, the radioactive materials
11
must be retained at the disposal facility, below surface, for an infinite amount of
time. Thus, it makes sense that the Legislature would not exempt these types of
licenses from the right to a public hearing.
By contrast, the right to a public hearing existed when O-Kee Dairy first sought
a new discharge permit, under Chapter 26 of the Water Code. But when it sought
to amend that permit to include better parameters that would improve the
protections included in the permit, the right to a public hearing no longer existed,
as the Supreme Court acknowledged.
Finally, as all parties in this appeal argued to this Court, Chapter 401 of the
Health and Safety Code provides a definition of “affected person” that differs from
the one found in Chapter 5 of the Water Code. City of Waco and Bosque River
Coalition concerned Chapters 5 and 26 of the Water Code, not the Health and
Safety Code. This is yet another reason that the two cases do not support the
Court’s decision in this case.
In short, although presented with the opportunity to employ a substantial-
evidence standard of review in determining whether one is an affected person, the
Supreme Court elected not to do so in those cases. Further, City of Waco and
Bosque River Coalition involved a different type of application, under a different
statute, with different public hearing requirements than the application at issue in
this case. The two cases simply do not apply here.
12
V. This Court should have applied a constitutional standing analysis in this
case.
Absent a controlling standard of review set out in statute, the proper standard of
review to be applied here is the constitutional standing analysis that this Court
adopted in City of Waco. The Texas Supreme Court has not disavowed this
standard of review, because it did not reach the issue of whether the Commission
erred in determining that the City of Waco was not an affected person. Further, the
constitutional standing analysis is consistent with federal caselaw involving similar
issues.
In its reply brief, Sierra Club cited a D.C. Court of Appeals decision, analyzing
whether NIRS and Public Citizen possessed the requisite standing to challenge
NRC’s decision to grant a uranium enrichment facility license and employing a
constitutional standing analysis. Nuclear Information & Resource Service v. NRC,
509 F.3d 562 (D.C. Cir. 2007) (the LES case). In determining that the protesting
parties had standing to challenge the license, the D.C. court of appeals applied a
constitutional standing analysis and explained that the Supreme Court and the D.C.
Court “have repeatedly held that individuals who live near a proposed federal
project and allege they will suffer concrete injury from the project have standing in
NEPA and other procedural rights cases.” Id. at 567 (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 572 n.7 (1992)). The Court noted that the protesting parties
13
lived near the proposed facility and alleged a risk of injury from radiation
generated by the facility. Because the NRC has not identified a suitable disposal
strategy for the waste the facility will produce, the waste will be stored at the
facility site and will emit harmful radiation, urged the protesting parties. Id. The
Court agreed that these claims, if successful, would require NRC to take additional
procedural steps before granting the license and would at least temporarily prevent
construction and operation of the facility near their homes; thus, the protesting
parties satisfied the “injury-in-fact” component of constitutional standing
jurisprudence. Id.
The D.C. Court of Appeals again addressed the constitutional standing
requirements for environmental plaintiffs in the case, Nuclear Energy Institute v.
Environmental Protection Agency, 373 F.3d 1251 (D.C. Cir. 2004) (the Yucca
Mountain case). In that case, several environmental organizations (and other
parties) challenged the statutory and regulatory scheme devised to establish and
govern a Yucca Mountain nuclear waste repository. Id. at 1257. To demonstrate
standing, the environmental groups relied on the statements by its members,
including one who lived and worked 18 miles from Yucca Mountain. Id. at 1266.
He alleged that EPA’s failure to adopt more stringent radiation-protection
standards will permit hazardous radionuclides from the buried waste to
14
contaminate his community’s groundwater supplies, causing adverse health effects.
Id.
The Court held that these allegations were more than sufficient to give the
member standing to sue in his own right. Id. The claimed injury to his ground
water supply is neither hypothetical nor conjectural, held the Court. Id. And the
Court acknowledged that even though radionuclides escaping from the Yucca
repository may not reach the community for thousands of years, the injury is
“actual or imminent,” because the member lives adjacent to the land where the
government plans to bury 70,000 metric tons of radioactive waste—a sufficient
harm in and of itself. Id. Finally, the Court held that the harm was “fairly
traceable” to the challenged agency action, and favorable relief would likely
redress the harm. Id.
Similarly, this Court should employ a constitutional standing analysis to
determine whether Sierra Club was an affected person entitled to a contested case
hearing in this case. In doing so, the Court must review Sierra Club’s pleadings (its
hearing request and reply to responses to its hearing request, including attached
affidavits from its experts) to determine whether it alleged sufficient facts to
demonstrate compliance with the definition of an affected person. If there are
disputed facts, then, Sierra Club must be given an opportunity to present evidence
in support of its allegations.
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CONCLUSION AND PRAYER
Sierra Club urges this Court to grant this motion for rehearing en banc and
reverse TCEQ’s decision denying Sierra Club’s hearing request.
Respectfully submitted,
/s/ Marisa Perales
Marisa Perales
SBT No. 24002750
Frederick, Perales,
Allmon & Rockwell, P.C.
707 Rio Grande, Suite 200
Austin, Texas 78701
(512) 469-6000
(512) 482-9346 (facsimile)
marisa@lf-lawfirm.com
CERTIFICATE OF COMPLIANCE
By my signature, below, I hereby certify that Sierra Club’s Motion for Rehearing
En Banc contains 3,602 words in the pertinent parts of the document, as calculated
by the computer program used to prepare this document.
/s/ Marisa Perales
Marisa Perales
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CERTIFICATE OF SERVICE
By my signature below, I certify that on this 14th day of January, 2015, a copy of
the foregoing document was served upon the parties identified below via electronic
mail and/or U.S. Postal Mail.
/s/ Marisa Perales
Marisa Perales
FOR THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY:
Anthony Grigsby
Assistant Attorney General
Environmental Protection and Administrative Law Division
P.O. Box 12548
Austin, Texas 78711-2548
Tel. (512) 463-2012
Fax (512) 320-0911
anthony.grigsby@texasattorneygeneral.gov
FOR WASTE CONTROL SPECIALISTS, LLC:
Terry Scarborough
V. Blayre Peña
Mike Woodward
Hance Scarborough, LLP
111 Congress Avenue, Suite 500
Austin, Texas 78701
Tel. (512) 479-8888
Fax (512) 482-6891
tscarborough@hslawmail.com
hpena@hslawmail.com
mwoodward@hslawmail.com
Pamela M. Giblin
Derek R. McDonald
Joseph R. Knight
Baker Botts
98 San Jacinto Blvd., Suite 1500
Austin, Texas 78701
17
Tel. (512) 322.2500
Fax (512) 322.8342
pam.giblin@bakerbotts.com
derek.mcdonald@bakerbotts.com
joe.knight@bakerbotts.com
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