TWCA Annual Convention

1. TCEQ Contested Case Hearing Reform
Texas Water Conservation Association
72nd
Annual Convention
Derek Seal
Winstead, PC
401 Congress Ave., Ste. 2100
Austin, Texas 78701
dseal@winstead.com
(512) 370-2807

2. 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).

3. 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.

4. Common Water-Related
Contested Case Hearings
• Wastewater Discharge Permits - TCEQ
• Water Rights - TCEQ
• Groundwater Permits - TCEQ
• Desired Future Conditions – TWDB
• Retail Water/Wastewater Ratemaking - PUC

5. 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

6. 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

7. 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.

8. TCEQ Contested Case Hearing Statistics
Annually 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

9. Legislative Reforms in 2015

10. TCEQ Permitting Timeline
TCEQ Testimony, May 13, 2014
House 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

11. Coalition of Business and Industry Support for
Contested Case Hearing Reform

12. SB 709 – Three Prongs to
Contested 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

13. SB 709 - Prong 1
Legislatively 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

14. Commission Discretion to Deny
Contested Case Hearing Request
TCEQ Testimony, May 13, 2014
House Environmental Regulation Committee
Discretion added by SB 709
Commission to
consider contensted
case hearing request

15. SB 709 - Prong 2
Prima 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

16. EPA’s Letter on Prima Facie Burden of Proof

17. SB 709 - Prong 3
180 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

18. 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

19. 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

20. EPA’s Comments on TCEQ’s Rulemaking

21. 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

22. 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

23. Derek Seal
Winstead, PC
401 Congress Ave., Ste. 2100
Austin, Texas 78701
dseal@winstead.com
(512) 370-2807