TCEQ Contested Case Hearing Reform

Texas Water Conservation Association72nd Annual Convention

Derek SealWinstead, PC

401 Congress Ave., Ste. 2100Austin, Texas 78701dseal@winstead.com

(512) 370-2807

Contested Case Hearing Defined

“Contested Case” means a proceeding, including a ratemaking or licensing proceeding, in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing. Government Code 2001.001(1).

Anatomy of a Contested Case Hearing

• Trial-Like Proceeding - Texas Rules of Evidence and Procedure

• Usually conducted by the State Office of Administrative Hearings

• Discovery - depositions, disclosure of documents, responses to interrogatories, etc.

• Involves attorneys, briefing, sworn testimony from engineers, toxicologists, etc.

Common Water-RelatedContested Case Hearings

• Wastewater Discharge Permits - TCEQ

• Water Rights - TCEQ

• Groundwater Permits - TCEQ

• Desired Future Conditions – TWDB

• Retail Water/Wastewater Ratemaking - PUC

Applications for TCEQ Permits/Amendments Subject to Contested Case Hearings

• Air Quality - Health & Safety Code, Chapter 382

• Water Quality - Water Code, Chapter 26

• Injection Wells – Water Code, Chapter 27

• Waste – Health & Safety Code, Chapter 361

• Water Rights – Water Code, Chapter 11

• Water Utility Districts – Water Code Chapters 49 & 54

• Radioactive Waste - Health & Safety Code, Chapter 401

Implications of Contested Case Hearings

• Permit processing delays for months or even up to a year or more in some cases

• Bargaining position for sophisticated, local, statewide, and national non-governmental organizations

• Legal and consulting costs

• Litigation risks

Contested Case Hearing Example: Corpus Christi Caller Times, August 7, 2015

Buckeye Texas Partners LLC donated to the newly established Environmental Justice Housing Fund in exchange for the fund's parent group, Citizens for Environmental Justice, dropping a legal challenge against a [TCEQ] permit the company was seeking to expand its operations here. . . . The fund is used to pay for families who live in the area to move out. It was established earlier this year after a different [TCEQ] permit challenge was settled for more than $2 million.

TCEQ Contested Case Hearing StatisticsAnnually Since 2010

• 1,300 to 1,650 applications subject to hearing request

• Hearing requests are received on 65 to 95 applications

• 10 to 35 hearings granted

TCEQ Testimony, May 13, 2014 House Environmental Regulation Committee

Legislative Reforms in 2015

TCEQ Permitting Timeline

TCEQ Testimony, May 13, 2014House Environmental Regulation Committee

30-60 Days

60-200 Days

30-75 Days

60 Days

60 Days

44 Days

Goal to issue permit

365 Days 180 Days

45 days

45 days

Coalition of Business and Industry Support for Contested Case Hearing Reform

SB 709 – Three Prongs toContested Case Hearing Reform

• Narrows the universe of hearing requesters who are entitled to a hearing

• A draft permit and sufficient supporting documentation is a prima facie demonstration that the application meets all requirements

• Limits the duration of a hearing to 180 days

• Applicable to air quality, water quality, waste, and UIC permit applications filed with TCEQ after September 1, 2015

SB 709 - Prong 1Legislatively Narrows the Contested Case Hearing Gate

Codifies Sierra Club v. TCEQ & Waste Control Specialists (April 2014), Texas 3rd Court of Appeals

Broad TCEQ Commission discretion to deny hearing requests based on:•technical data•expert reports•the merits of the application•likely impact of the regulated activity

Commission Discretion to DenyContested Case Hearing Request

TCEQ Testimony, May 13, 2014House Environmental Regulation Committee

Discretion added by SB 709

Commission to consider contensted case hearing request

SB 709 - Prong 2Prima Facie Burden of Proof

• An applicant meets a prima facie burden of proof that the application complies with all requirements via the filing of the draft permit and supporting technical documents in the permitting file

• Protestants may overcome the prima facie demonstration by providing specific evidence that a provision in the draft permit does not meet a legal or technical requirement

• The applicant may rebut any evidence presented by protestants

EPA’s Letter on Prima Facie Burden of Proof

SB 709 - Prong 3180 Day Limit on Contested Case Hearing

• After the preliminary hearing, an Administrative Law Judge must issue a Proposal for Decision within 180 days, or an earlier date specified by the TCEQ Commissioners

• The deadline can be extended by agreement of the parties, or if failure to extend would deprive a party of due process or other constitutional rights

SB 709 – Miscellaneous• Issues may not be referred unless an affected person raised the issue

in a comment• no “piggybacking” on issues raised by persons who do not qualify to

be a party

• Hearing requesters must raise detailed issues

• Organizations must specifically name the member upon whom their request for a hearing is based• No shopping for members who trigger standing at late stages

• Response to Comments must be available prior to the preliminary hearing

• Posting of permit application notices by TCEQ on the internet

• 30 day notice to local legislators prior to issuance of the draft permit

TCEQ Rulemaking

• August 21 – publication of the proposed rule in the Texas Register

• December 9 – TCEQ Commission final decision

• TCEQ’s final rules are a straightforward implementation of SB 709

EPA’s Comments on TCEQ’s Rulemaking

EPA Comments

• Rebutting the prima facie demonstration may result in a de facto bar to judicial review

• Consideration of the underlying merits in evaluating hearing requests interferes with standing for judicial review

• Participation in a contested case hearings should not be a prerequisite to judicial review

Future Developments

• The first contested case hearing that is subject to SB 709 will set precedent for future contested case hearings• Discovery logistics, who to depose/right to cross

examination if the applicant does not offer experts, whether a 180 timeframe will necessitate the end of pre-filed testimony in favor of live hearings, etc.

• Environmental Defense Fund/Caddo Lake Institute Petition for Administrative Action

• Requesting EPA to revoke delegation to TCEQ of permitting authority under the federal Clean Water Act and the federal Clean Air Act

• Repeated EPA’s comments made during the TCEQ rulemaking

Derek SealWinstead, PC

401 Congress Ave., Ste. 2100Austin, Texas 78701dseal@winstead.com

(512) 370-2807