the Texas Commission on Environmental Quality and Waste Control Specialists, LLC v. Sierra Club

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.

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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.

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 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.

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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.

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 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.”

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 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)).

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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

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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.

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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

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Tel. (512) 322.2500
Fax (512) 322.8342
pam.giblin@bakerbotts.com
derek.mcdonald@bakerbotts.com
joe.knight@bakerbotts.com

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