Nicky E. Dyer, Flora Harrell, Edgar Hoagland, Shirley Hoagland, James Langston, James A. Langston, III, Lois Nelson, Brian Rodel, Richard Ward, Edward A. (Art) Wilson, Montgomery County, and City of Conroe v. Texas Commission on Environmental Quality and Texcom Gulf Disposal, Llc ( 2022 )

Supreme Court of Texas
══════════
No. 19-1104
══════════
Nicky E. Dyer, Flora Harrell, Edgar Hoagland, Shirley Hoagland,
James Langston, James A. Langston, III, Lois Nelson, Brian
Rodel, Richard Ward, Edward A. (Art) Wilson, Montgomery
County, and City of Conroe,
Petitioners,
v.
Texas Commission on Environmental Quality and TexCom Gulf
Disposal, LLC,
Respondents
═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Third District of Texas
═══════════════════════════════════════
Argued January 12, 2022
CHIEF JUSTICE HECHT delivered the opinion of the Court.
Class I underground injection-control wells manage industrial
waste by injecting it thousands of feet underground. But these injection
wells could potentially harm important subsurface resources—namely
drinking water and petroleum. To “maintain the quality of fresh water
in the state to the extent consistent with the public health . . . and the
operation of existing industries,” 1 these injection wells undergo an
extensive permitting process with the Texas Commission on
Environmental Quality (TCEQ). A permit application cannot get off the
starting blocks unless accompanied by a letter from the Railroad
Commission (RRC) concluding that the proposed wells “will not
endanger or injure any known oil or gas reservoir.” 2
In this case, RRC issued such a letter but then rescinded it after
six years of administrative hearings, around the same time TCEQ
issued its final order granting the permit application. We conclude that
the rescission did not deprive TCEQ of jurisdiction, and that on the facts
of this case, TCEQ did not violate the Texas Administrative Procedure
Act (APA) 3 by declining to reopen the administrative record for further
proceedings. We overrule petitioners’ remaining challenges to TCEQ’s
order and affirm the judgment of the court of appeals. 4
I
The Injection Well Act (IWA) governs the permitting process for
injection wells in the state. 5 TCEQ has jurisdiction over wells that
dispose of industrial and municipal waste, while RRC has jurisdiction
over wells that dispose of oil-and-gas waste. Class I wells, the type at
issue here, fall under TCEQ’s jurisdiction. But the IWA still requires
RRC involvement in the permitting process for Class I wells. TCEQ
1 TEX. WATER CODE § 27.003.
2 Id. § 27.015(a).
3 TEX. GOV’T CODE §§ 2001.001-2001.903.
4 639 S.W.3d 721 (Tex. App.—Austin 2019) (2-1).
5 TEX. WATER CODE §§ 27.001-27.207.
2
“may not proceed to hearing on any issues other than preliminary
matters” 6 until the applicant submits a letter from RRC “concluding that
drilling or using the disposal well and injecting industrial and municipal
waste into the subsurface stratum will not endanger or injure any
known oil or gas reservoir.” 7
After receiving this no-harm letter, TCEQ’s process may begin in
earnest. Before granting a permit, TCEQ must make several findings,
including that (1) “the injection well is in the public interest;” (2) “no
existing rights, including . . . mineral rights, will be impaired;” and
(3) “both ground and surface fresh water can be adequately protected
from pollution”. 8 TCEQ regulations flesh out these statutory directives
by enumerating materials that TCEQ “shall consider . . . before issuing
a Class I Injection Well Permit”, 9 including geological maps, plans, and
data to determine whether a given area is “geologically suitable” for an
injection well. 10 A key question to geological suitability is whether the
underground rock formations will confine the injected waste, keeping it
clear from underground sources of drinking water.
An applicant must specify both an injection zone and an injection
interval. The injection zone is defined as “[a] formation, a group of
formations, or part of a formation that receives fluid through a well.” 11
6 Id. § 27.015(b).
7 Id. § 27.015(a).
8 Id. § 27.051(a)(1)-(3).
9 30 TEX. ADMIN. CODE § 331.121(a).
10 Id. § 331.121(c)(2).
11 Id. § 331.2(60).
3
In layman’s terms, it is the area where the waste is permitted to flow.
The injection interval is the portion of the injection zone where the well
is perforated and the waste is directly placed. 12
TCEQ “may” hold a hearing on a permit application “[i]f it is
considered necessary and in the public interest,” but TCEQ “shall” hold
a hearing if one “is requested by a local government located in the county
of the proposed disposal well site or by an affected person”, 13 which
TCEQ regulations define as “[a]ny person who has a personal justiciable
interest related to a legal right, duty, privilege, power, or economic
interest affected by the proposed injection operation for which a permit
is sought.” 14 These contested case hearings are formal, trial-like
proceedings held before administrative law judges from the State Office
of Administrative Hearings (SOAH). 15 When “referring a matter for
hearing,” TCEQ provides SOAH with “a list of disputed issues.” 16 Before
testimony can begin, there must be evidence “that proper notice
regarding the hearing was given to affected persons.” 17 After the close
of evidence, SOAH submits a proposal for decision (PFD) to TCEQ. 18 The
12 Id. § 331.2(57).
13 TEX. WATER CODE § 27.018(a).
14 30 TEX. ADMIN. CODE § 331.2(3).
15 See TEX. GOV’T CODE § 2003.047(a) (providing that SOAH “shall
perform contested case hearings” for TCEQ).
16 Id. § 2003.047(e).
17 TEX. WATER CODE § 27.018(c).
18 TEX. GOV’T CODE § 2003.047(l).
4
parties file briefs for or against it, and TCEQ issues a final order on the
permit. 19
II
A
TexCom Gulf Disposal, LLC 20 sought to develop a
commercial-waste-disposal facility on a 27-acre site in Montgomery
County, near the city of Conroe. The selected site had one nonoperative
injection well already constructed. In 2005, TexCom applied to TCEQ
for permits to operate this existing well and construct up to three
additional wells. These wells would dispose of nonhazardous industrial
wastewater, hauled to the facility from across the region.
The site is situated within the Conroe Oil Field and sits
immediately atop an aquifer system. Montgomery County relies on this
aquifer system as its sole source of drinking water. Directly beneath the
aquifer system is the Jackson Shale—a 1,000-foot-thick sedimentary
formation with a dough-like consistency.
Beneath the Jackson Shale lies the Cockfield Formation, which is
made up of three distinct layers: the Upper Cockfield (5,134 to 5,629 feet
below the surface), the Middle Cockfield (5,629 to 6,045 feet), and the
Lower Cockfield (6,045 to 6,390 feet). Each Cockfield layer is separated
by a layer of shale, and there is another massive shale layer beneath the
Lower Cockfield. TCEQ describes the Cockfield Formation with the
19 Id. § 2003.047(l)-(m).
20 While this litigation was pending, TexCom was renamed Union
Processing Systems. We will continue to refer to this respondent as TexCom,
as the parties do in their briefs.
5
analogy of a three-layer cake that has layers of shale (icing) between
each cake layer and additional layers of shale on top and on bottom.
B
TexCom’s permit application included an RRC no-harm letter, as
required by statute. TexCom’s application represented that it owned the
mineral rights underneath the site, when in fact an entity called Sabine
Royalty Trust owned the mineral rights under the site and the right to
receive royalties associated with them. Because Sabine was not
identified as an affected person in TexCom’s application, it was not given
formal notice of the proceedings as required by the IWA.
TCEQ’s Executive Director made a preliminary decision to
approve the application and prepared draft permits, specifying the
entire Cockfield Formation as the injection zone and the Lower
Cockfield specifically as the injection interval. Montgomery County, the
City of Conroe, the Lone Star Groundwater Conservation District,
TCEQ’s Public Interest Counsel, and several individuals opposed the
application. They argued that the wells would harm the underground
sources of drinking water and that less harmful alternative disposal
options existed.
In 2007, SOAH conducted a contested case hearing and issued a
PFD in 2008 recommending that TexCom’s permits be granted, but with
special conditions. Instead of granting the permits, TCEQ remanded the
matter to SOAH with instructions to consider evidence of new modeling,
the public interest, and alternative disposal options.
After the remand but before a new contested case hearing could
be held, Denbury Onshore acquired mineral leases in the Conroe Oil
6
Field within TexCom’s proposed injection zone. Denbury then initiated
proceedings at RRC to have the 2005 no-harm letter rescinded and, over
TexCom’s objections, intervened in the contested case proceedings
before SOAH.
While Denbury’s request to RRC was pending, the second
contested case hearing at SOAH was held between June and September
2010, with Denbury as a party. In November, SOAH issued an amended
PFD, this time recommending that TCEQ deny TexCom’s permit
application. That same month, after an evidentiary hearing, examiners
at RRC issued a PFD recommending that the 2005 no-harm letter be
rescinded. The RRC examiners concluded that TexCom’s proposed
waste-injection activities would endanger or injure a known oil or gas
reservoir.
Two months later, on January 13, 2011, while SOAH’s amended
PFD was still pending before TCEQ, RRC issued a final order adopting
the findings and conclusions in the examiners’ PFD and rescinding the
2005 no-harm letter. The order’s effective date was delayed some 90
days to give the parties an opportunity to seek rehearing. The protesting
parties moved to reopen the administrative record and include RRC’s
final order. They also brought RRC’s final order to TCEQ’s attention
through their exceptions to SOAH’s amended PFD, filed with TCEQ.
Two weeks later, TCEQ held an open meeting on TexCom’s
application and SOAH’s amended PFD. At this meeting, the protesting
parties again raised the issue of RRC’s not-yet-effective final order
rescinding the 2005 no-harm letter. Despite SOAH’s recommendation
that TexCom’s permit application be denied, TCEQ voted to approve
7
TexCom’s permits. TCEQ issued a revised order on April 8, 2011,
changing some of SOAH’s findings and granting TexCom’s application.
RRC’s rescission of the 2005 no-harm letter became effective on April
18, 2011.
C
Petitioners and other parties filed suit in the district court for
judicial review of TCEQ’s order under the APA. 21 Sabine Royalty Trust
also sued for declaratory relief, arguing that TCEQ had acted ultra vires
by deciding on TexCom’s application without giving Sabine the
IWA-required notice of proceedings. TexCom intervened to defend
TCEQ’s order. The suits were consolidated in the trial court.
The trial court denied TCEQ’s and TexCom’s pleas to the
jurisdiction, which had sought to dismiss Sabine’s claims as well as
claims by other plaintiffs that were based on Sabine’s lack of notice. The
court of appeals reversed, holding that: (1) the IWA’s requirement of
notice to affected persons before an application may be heard is not
jurisdictional; 22 (2) Sabine judicially admitted to having actual notice of
the administrative proceedings in June 2010 and failed to exhaust
administrative remedies that were still available to it; 23 and (3) the
other plaintiff–appellees lacked standing to complain about Sabine’s
21 See TEX. GOV’T CODE §§ 2001.171-2001.176 (providing for judicial
review).
22 Tex. Comm’n on Env’t Quality v. Denbury Onshore, LLC,
No. 03-11-00891-CV, 2014 WL 3055912, at *5-6 (Tex. App.—Austin July 3,
2014, no pet.).
23 Id. at *6, 9.
8
lack of statutory notice because they were not personally injured by it. 24
The court dismissed all of Sabine’s claims and the claims of other
plaintiffs complaining of Sabine’s lack of notice. 25 None of the plaintiff–
appellees sought review in this Court.
On remand, the trial court affirmed TCEQ’s order and denied
plaintiffs’ claims for declaratory relief. The City of Conroe, Montgomery
County, and the individual plaintiffs appealed. 26 A divided court of
appeals affirmed, 27 and we granted the plaintiffs’ petition for review. 28
III
Under the APA, “[a] person who has exhausted all administrative
remedies available within a state agency and who is aggrieved by a final
decision in a contested case” 29 may challenge that decision by petitioning
for judicial review in a Travis County district court within the time
specified in the Act. 30 The trial court decides the challenge without a
24Id. at *10 (citing Heckman v. Williamson County, 369 S.W.3d 137,
154-155 (Tex. 2012)).
25 Id.26 Denbury is no longer a party in this case. Although Denbury filed a
notice of appeal, it then filed a motion in the court of appeals to dismiss its
appeal, which was granted.
27 639 S.W.3d 721 (Tex. App.—Austin 2019) (2-1).
28After the City of Conroe and Montgomery County filed a joint petition
for review in this Court, the individual plaintiff–petitioners filed a letter
adopting the petition filed by the City and the County. The individual
petitioners are Nicky E. Dyer, Flora Harrell, Edgar Hoagland, Shirley
Hoagland, James Langston, James A. Langston, III, Lois Nelson, Brian Rodel,
Richard Ward, and Edward A. (Art) Wilson.
29 TEX. GOV’T CODE § 2001.171.
30 Id. § 2001.176(a)-(b).
9
jury based on the administrative record and any additional evidence
allowed by the court. 31 The trial court
(1) may affirm the agency decision in whole or in part;
and
(2) shall reverse or remand the case for further
proceedings if substantial rights of the appellant
have been prejudiced because the administrative
findings, inferences, conclusions, or decisions are:
(A) in violation of a constitutional or statutory
provision;
(B) in excess of the agency’s statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial
evidence considering the reliable and
probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by
abuse of discretion or clearly unwarranted
exercise of discretion. 32
The question of whether an agency’s decision violates one of these
grounds is a question of law. 33
Petitioners raise several challenges to TCEQ’s 2011 order
31 Id. § 2001.175(c)-(e).
32 Id. § 2001.174.
33See, e.g., Tex. Comm’n on Env’t Quality v. Maverick County, 642
S.W.3d 537, 547 (Tex. 2022) (“The question whether an agency’s determination
meets the substantial-evidence standard is one of law.” (cleaned up)); Tex. Dep’t
of Pub. Safety v. Valdez, 956 S.W.2d 767, 769 (Tex. App.—San Antonio 1997,
no pet.) (“Each of the grounds for reversal listed in section 2001.174(2),
including substantial evidence review, presents a question of law.”).
10
approving TexCom’s permit application. 34 We will first address
petitioners’ procedural challenges to the order and the administrative
process that produced it 35 and then the challenges to the substance of
the order.
IV
A
Petitioners raise two challenges to the order based on RRC’s
rescission of the no-harm letter. 36 They argue first that TCEQ’s order is
34 The permits that are the subject of this appeal had an effective time
of ten years. TexCom began the renewal process while this litigation has been
pending. In June 2021, RRC issued four no-harm letters to TexCom with
respect to its permit-renewal application. TexCom’s existing permits “remain
in full force and effect and will not expire until commission action on the
application for renewal is final.” 30 TEX. ADMIN. CODE § 305.63(a)(4). The
parties agree that the 2021 no-harm letters should not affect our resolution of
petitioners’ challenges to the 2011 order. We agree too; the letters play no part
in our decision.
35 Included in petitioners’ procedural challenges is the argument that
respondents’ failure to mail mineral-interest-owner Sabine Royalty Trust
notice of the contested case proceedings prior to SOAH’s hearing evidence in
2007, as required by Section 27.018(c) of the IWA, renders TCEQ’s 2011 order
void. See TEX. WATER CODE § 27.018(c); 30 TEX. ADMIN. CODE
§ 39.651(c)(4)(C)-(D). The court of appeals rejected this argument on several
bases. See Denbury Onshore, 2014 WL 3055912, at *6-10. We agree with the
court of appeals’ conclusion that respondents’ failure to mail notice to Sabine
does not provide a basis for reversal of TCEQ’s order here.
36 Respondent TCEQ argues that petitioners lack “standing” to assert
any challenge to TCEQ’s order based on RRC’s rescission of the 2005 no-harm
letter because, as nonmineral owners, they cannot meet the requirement for
relief in Section 2001.174(2) that their “substantial rights . . . have been
prejudiced” by the TCEQ order’s being consistent with the 2005 letter. In
recent cases we have “discouraged the use of the term standing to describe
extra-constitutional restrictions on the right of a particular plaintiff to bring a
particular lawsuit.” Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 616
S.W.3d 558, 567 (Tex. 2021) (citing Pike v. EMC Mgmt., LLC, 610 S.W.3d 763,
11
void because the IWA makes both the issuance and the continued
effectiveness of a no-harm letter jurisdictional—or at least mandatory—
requirements for TCEQ to approve an injection-well permit.
Alternatively, petitioners contend that TCEQ “acted arbitrarily and
capriciously and abused its discretion” by not reopening the record and
considering RRC’s rescission before issuing its final order.
1
Petitioners’ jurisdictional argument is based primarily on
Sections 27.015(a) and (b) of the Water Code, which require an applicant
to “submit with the application” a no-harm letter from RRC and prohibit
TCEQ from hearing “any issues other than preliminary matters such as
notice” until the no-harm letter is submitted:
(a) A person making application to the commission for a
disposal well permit under this chapter shall submit
with the application a letter from the railroad
commission concluding that drilling or using the
disposal well and injecting industrial and municipal
waste into the subsurface stratum will not endanger
or injure any known oil or gas reservoir.
(b) In a hearing on an application for a disposal well
permit under this chapter, the commission may not
proceed to hearing on any issues other than
preliminary matters such as notice until the letter
required from the railroad commission under
774 (Tex. 2020)). “[T]he question whether a plaintiff has established his right
‘to go forward with [his] suit’ or ‘satisfied the requisites of a particular statute’
pertains ‘in reality to the right of the plaintiff to relief rather than to the
[subject-matter] jurisdiction of the court to afford it.’” Pike, 610 S.W.3d at 774
(second and third brackets in original) (quoting Dubai Petroleum Co. v. Kazi,
12 S.W.3d 71, 76-77 (Tex. 2000)). Because TCEQ’s argument pertains to the
right of petitioners to relief under the APA, and not the courts’ subject-matter
jurisdiction to hear their claims, we need not address it.
12
Subsection (a) of this section is provided to the
commission. 37
Section 27.051(a) states that TCEQ “may grant an application . . . and
may issue the permit if it finds”, among other things, “that no existing
rights, including . . . mineral rights, will be impaired”. 38
Section 27.015(c) states that TCEQ “shall” make that finding as to oil or
gas rights if RRC has issued a no-harm letter. 39
The court of appeals concluded that petitioners’ “proposed
interpretation of section 27.015 goes beyond the express statutory
language.” 40 Section 27.015(b) simply says that TCEQ “may not proceed
to [a] hearing” on anything other than preliminary issues until a no-
harm letter is on file. The no-harm letter issued by RRC in 2005 was on
file with TCEQ when SOAH began the first contested case hearing in
2007. RRC issued an order rescinding the 2005 letter on January 13,
2011, but the effectiveness of that order was delayed 90 days to allow
time for rehearing proceedings. The order was not yet effective—and the
2005 letter remained in effect—when TCEQ issued its final order
approving TexCom’s permit application on April 7. Thus, the plain
language of Section 27.015(b) was satisfied here.
37 TEX. WATER CODE § 27.015(a)-(b) (emphases added).
38 Id. § 27.051(a)(2).
39 See id. § 27.015(c) (“The commission shall find that there will be no
impairment of oil or gas mineral rights if the railroad commission has issued
a letter under Subsection (a) that concludes that drilling and using the disposal
well will not endanger or injure any known oil or gas reservoir.”).
40 639 S.W.3d at 732.
13
There is no “explicit language” 41 in the IWA indicating that the
Legislature intended the draconian and inefficient consequence of
petitioners’ argument—that RRC’s rescission of a no-harm letter six
years after it was issued voids a TCEQ order granting a permit
application issued in the meantime. And we “have no right to engraft
upon the statute any conditions or provisions not placed there by the
legislature.” 42 We hold that, even if Section 27.015 is jurisdictional,
RRC’s rescission of the 2005 no-harm letter did not void TCEQ’s
already-final order and the contested case proceedings giving rise to it
for lack of jurisdiction.
In a related argument, petitioners contend that even if TCEQ had
jurisdiction, TexCom’s application still became statutorily deficient
when RRC issued its notice of recission. We disagree for the reasons
discussed above. The requirements of Section 27.015 were plainly
satisfied in this case.
2
Petitioners say, alternatively, that TCEQ acted arbitrarily or
capriciously or abused its discretion 43 by refusing to reopen the record
and undergo more proceedings in light of RRC’s rescission of the 2005
no-harm letter. It is undisputed that TCEQ was aware of RRC’s issued-
See City of DeSoto v. White, 288 S.W.3d 389, 395 (Tex. 2009) (“The
41
Code does not contain any explicit language indicating that this notice
requirement is jurisdictional.”).
42Iliff v. Iliff, 339 S.W.3d 74, 80-81 (Tex. 2011) (quoting Duncan, Wyatt
& Co. v. Taylor, 63 Tex. 645, 649 (1885)).
43 TEX. GOV’T CODE § 2001.174(2)(F).
14
but-not-yet-effective order rescinding the 2005 letter before TCEQ
issued its own order.
The court of appeals listed six reasons why the record cuts against
petitioners’ argument, some of which we have reworded for brevity and
clarity:
(i) the rescission did not take effect until four years
after contested case proceedings began;
(ii) no mineral-interest owner intervened as a party
until Denbury did so in 2010;
(iii) “the no-harm letter was admitted during the 2007
hearing without objection and, thus, was properly
considered as evidence before [SOAH]”;
(iv) “the 2010 hearing on remand was expressly limited
to specified topics that did not include impairment
of mineral rights”;
(v) “the administrative record was completed and closed
in 2010”; and
(vi) TCEQ voted to approve TexCom’s permit application
in January 2011, months before the rescission took
effect. 44
The Legislature has given RRC an important role to play in the
injection-well-permitting process. An application cannot proceed until
RRC has “conclud[ed] that drilling or using the disposal well and
injecting industrial and municipal waste into the subsurface stratum
will not endanger or injure any known oil or gas reservoir.” 45 Moreover,
a conclusion of no harm by RRC is binding on TCEQ, for at least some
applications—Section 27.015(c) states that TCEQ “shall find that there
44 See 639 S.W.3d at 734.
45 TEX. WATER CODE § 27.015(a).
15
will be no impairment of oil or gas mineral rights if the railroad
commission has issued a [no-harm] letter”. 46 But these statutory
requirements were satisfied here by the 2005 no-harm letter, which
remained in effect until the administrative record had been closed and
TCEQ had issued its final order on TexCom’s permit application.
We agree that TCEQ is statutorily required to take into account
RRC’s conclusion about whether a proposed injection well would
endanger known oil or gas reservoirs. This includes a change in RRC’s
position, especially when the change is precipitated by evidence that was
not presented in the original RRC proceeding due to a party’s lack of
notice. And an agency decision is arbitrary if the agency “failed to
consider a factor the legislature directs it to consider”. 47 But based on
the thorough record and unique facts before us, we cannot say that
TCEQ acted arbitrarily or capriciously or abused its discretion by failing
in 2011 to reopen the administrative record to conduct further
proceedings on RRC’s rescission of a no-harm letter issued in 2005.
46 Id. § 27.015(c). We note the parties’ dispute over whether an
uncodified session law limits the applicability of Section 27.015(c) to
applications that were pending on June 1993. Act of May 31, 1993, 73d Leg.,
R.S., ch. 802, § 8, 1993 Tex. Gen. Laws 3195, 3197 (“Section 27.015(c), Water
Code, as added by this Act, applies only to an application before [TCEQ] which
is pending on the effective date of this Act.”). We do not decide the issue here.
If Section 27.015(c) does apply to TexCom’s application, as petitioners urge,
then TCEQ complied—RRC had issued a no-harm letter, which was still
effective, so TCEQ found no impairment of mineral rights.
47Pub. Util. Comm’n v. Tex. Indus. Energy Consumers, 620 S.W.3d 418,
427 (Tex. 2021) (quoting City of El Paso v. Pub. Util. Comm’n, 883 S.W.2d 179,
184 (Tex. 1994)).
16
On remand at SOAH, Denbury presented much of the same
evidence that convinced RRC to change its mind, despite TexCom’s
objections that such evidence exceeded the limited scope of the remand.
The ALJs directly addressed Denbury’s evidence in their amended PFD,
placing it front-and-center in TCEQ’s review of the record. TCEQ could
have reasonably concluded that a remand to SOAH would have simply
strained the time and resources of both the parties and the State without
a change to the evidentiary landscape.
In sum, even if TCEQ were not bound by RRC’s still-effective no-
harm letter by virtue of Section 27.015(c), it did not abuse its discretion
by declining to reopen the administrative record to rehear evidence that
it had already considered. It was within TCEQ’s discretion to balance
these various considerations and leave the record closed. 48
B
Petitioners next challenge the changes that TCEQ made between
its February 2011 order and its April 2011 order. At the January 2011
public meeting, the Commissioners voted to “adopt TexCom’s proposed
revisions” to the PFD, “grant TexCom’s . . . permit application”, and
“issue the . . . draft permits for [the injection wells]”. This decision was
memorialized in the February 2011 order. But the findings of fact in the
February 2011 order inconsistently listed TexCom’s injection zone as
48 See 30 TEX. ADMIN. CODE § 80.265 (“[TCEQ] . . . may order [SOAH]
to reopen the record for further proceedings on specific issues in dispute.”
(emphasis added)). We reiterate that our holding is based on the unique facts
of this case, where the parties with mineral interests, although not given
proper notice, still had the opportunity to substantively participate in the
TCEQ hearing process.
17
both: (1) the entire Cockfield Formation, and (2) only the Lower
Cockfield. The February 2011 order then granted the permits with
specific additional conditions, which did not include changing the
injection zone. 49
Without a public meeting, TCEQ revised its order in April 2011.
The revision included a letter from TCEQ’s general counsel explaining
that the revision corrected “clerical errors that were not consistent with
[TCEQ’s] deliberations and decision” at the January meeting. Among
other typographical corrections, the revised order modified the
inconsistent findings of fact that listed the injection zone as only the
Lower Cockfield. Since this revision did not occur following a properly
noticed open meeting, petitioners argue that TCEQ acted improperly in
issuing the revised order—either by violating the Open Meetings Act, 50
or by acting through one commissioner, individually, instead of the body
as a whole. 51
49 The additional conditions primarily involved monitoring, testing, and
modeling requirements, as well as a condition requiring the relocation of the
facility entrance.
50 TEX. GOV’T CODE §§ 551.001-551.146. The Open Meetings Act
generally requires that TCEQ deliberations between commissioners regarding
public business be properly noticed and open to the public. See id. § 551.002
(“Every regular, special, or called meeting of a governmental body shall be open
to the public, except as provided by this chapter.”).
51 TCEQ orders must be issued by the body as a whole, not by a single
member. See TEX. WATER CODE § 5.058(e); Webster v. Tex. & Pac. Motor
Transp. Co., 166 S.W.2d 75, 76 (Tex. 1942) (“It is a well[-]established rule in
this State . . . that where the Legislature has committed a matter to a board,
bureau, or commission, or other administrative agency, such board, bureau, or
commission must act thereon as a body at a stated meeting, or one properly
called . . . .”).
18
It is undisputed that TCEQ properly held a public meeting and
acted as a body in granting TexCom’s permit application. TCEQ’s next
job was to put its order in writing. 52 After a TCEQ decision is
memorialized in a written order, TCEQ’s general counsel has the
authority to make clerical changes to that order. 53
The April order does not substantively change TCEQ’s expressed
intention at the January open meeting. Instead, it conforms the written
order to it. At the meeting, the commissioners voted to “issue the
[executive director’s] draft permits” for the injection wells, not specifying
any change to the injection zone. These draft permits listed the injection
zone as the entire Cockfield Formation. TCEQ’s general counsel acted
within its delegated authority to make clerical corrections in order to
conform the inconsistent findings of fact with TCEQ’s clearly stated
decision at the open meeting.
V
We now turn to the substance of the order. TCEQ changed a
number of SOAH’s findings of fact, and made additional findings based
on evidence in the record. Petitioners bring three challenges to TCEQ’s
authority to make these changes. First, petitioners argue that TCEQ
52 TEX. GOV’T CODE § 2003.047(m) (“The commission shall serve a copy
of the commission’s order, including its finding of facts and conclusions of law,
on each party.”).
53See TEX. WATER CODE § 5.110(d) (“The general counsel shall perform
the duties and may exercise the powers specifically authorized by this code or
delegated to the general counsel by [TCEQ].”); Tex. Comm’n on Env’t Quality,
Docket No. 2009-0059-RES (Feb. 2, 2009) (delegating to the general counsel
the “[a]uthority to make clerical and clarification changes to Orders and
documents adopted by [TCEQ], to effectuate the clear intent of [TCEQ’s] action
taken”).
19
only has the statutory authority to amend technical errors or incorrect
applications of law. Second, petitioners contend that TCEQ’s
explanation for its changes was statutorily inadequate. Finally,
petitioners argue that many findings of fact crucial to TCEQ’s decision
were not supported by substantial evidence. We take each contention in
turn.
A
1
To begin, petitioners rely on Section 2001.058(e) of the APA to
urge that TCEQ overstepped its statutory authority to change SOAH’s
findings of fact. Agencies subject to Section 2001.058(e) may only alter
a finding of fact or conclusion of law if the agency determines:
(1) that the administrative law judge did not properly
apply or interpret applicable law, agency rules,
written policies provided under Subsection (c), or
prior administrative decisions;
(2) that a prior administrative decision on which the
administrative law judge relied is incorrect or
should be changed; or
(3) that a technical error in a finding of fact should be
changed. 54
Since TCEQ’s changes went beyond correcting technical or legal errors,
petitioners first argue that TCEQ exceeded its statutory authority.
But Section 2003.047(m) of the Government Code expressly
grants TCEQ the authority to change any finding of fact:
Except as provided in Section 361.0832, Health and Safety
Code, the commission shall consider the proposal for
decision prepared by the administrative law judge, the
54 TEX. GOV’T CODE § 2001.058(e).
20
exceptions of the parties, and the briefs and argument of
the parties. The commission may amend the proposal for
decision, including any finding of fact, but any such
amendment thereto and order shall be based solely on the
record made before the administrative law judge. Any such
amendment by the commission shall be accompanied by an
explanation of the basis of the amendment. 55
These two provisions—Sections 2001.058(e) and 2003.047(m)—cannot
both apply. Section 2001.058(e) sharply curtails a reviewing agency’s
authority to revisit basic “adjudicative” facts. 56 For findings that do not
implicate agency policy or legal interpretation, an agency is only
authorized to correct technical errors. In contrast, Section 2003.047(m)
plainly authorizes TCEQ to amend “any finding of fact” so long as the
amendment is based on the administrative record and accompanied by
an explanation. This is a much looser standard that allows TCEQ to
revisit the record, reweigh the evidence, and revise “any” findings.
Petitioners point to Section 2003.047(n)—a gap-filling provision
that incorporates the provisions of Chapter 2001 to the extent they are
not inconsistent with Section 2003.047. 57 Petitioners argue that it is
possible for TCEQ to comply with both provisions. Therefore, the
provisions are not “inconsistent” and both must apply. While we favor
55 Id. § 2003.047(m) (emphasis added).
56 See Hyundai Motor Am. v. New World Car Nissan, Inc., 581 S.W.3d
831, 838 (Tex. App.—Austin 2019, no pet.) (“Adjudicative facts . . . are ‘roughly
the kind of facts that go to a jury in a jury case.’” (quoting Flores v. Emps. Ret.
Sys., 74 S.W.3d 532, 539 (Tex. App.—Austin 2002, pet. denied))).
57See TEX. GOV’T CODE § 2003.047(n) (“The provisions of Chapter 2001
shall apply to contested case hearings for the commission to the extent not
inconsistent with this section.”).
21
concurrent operation of overlapping statutes, 58 the provisions at issue
provide two fundamentally different grants of authority that do not
overlap. Section 2003.047(m) is a self-contained grant of authority
specifically crafted for TCEQ. Section 2001.058(e) is a much narrower
grant. TCEQ cannot be subject to both—it possesses the broad authority
that Section 2003.047(m) specifically grants to it, not the narrow
authority of Section 2001.058(e).
Allowing TCEQ more leeway in changing findings of fact is far
from an absurd result. 59 Since SOAH is entirely a creature of statute, 60
the Legislature determines the extent of deference an agency owes to
SOAH’s findings and conclusions. Section 2001.058(e) reflects the
Legislature’s general preference to place adjudicative factfinding
authority primarily with SOAH. But for some agencies that handle
complex, technical matters based on objective evidence, such as TCEQ, 61
the Legislature has deemed it fit to grant a more extensive factfinding
58 See In re Mem’l Hermann Hosp. Sys., 464 S.W.3d 686, 716 (Tex. 2015)
(“To the extent possible, we will construe [overlapping provisions of two
different statutes] in a way that harmonizes rather than conflicts.”).
See Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011) (“The plain
59
meaning of the text is the best expression of legislative intent unless a different
meaning is apparent from the context or the plain meaning leads to absurd or
nonsensical results.”).
60See TEX. GOV’T CODE § 2003.021 (establishing SOAH and describing
its powers and duties).
61Id. § 2003.047(d) (acknowledging the “technical or other specialized”
matters that come before TCEQ).
22
authority. 62 Such matters depend little—if at all—on matters of witness
credibility but are instead well suited for a review of the record and the
application of agency expertise.
Certainly, in some instances TCEQ may amend a technical error
or correct a misapplication of agency policy. But it does so solely by
virtue of its broad authority under Section 2003.047(m) to “amend the
proposal for decision, including any finding of fact”. 63 Subjecting TCEQ
to the restrictions of Section 2001.058(e) would undercut the
Legislature’s intent to vest TCEQ with more factfinding authority than
its sister agencies, as clearly expressed in the text of Section
2003.047(m). 64
In sum, Section 2003.047(m) provides TCEQ with a specific grant
of broad authority to amend a proposal for decision, including any
finding of fact, so long as TCEQ bases the amendment solely on the
62 See id. § 2003.049(g) (granting the Public Utility Commission
expanded authority to change findings of fact); Sw. Pub. Serv. Co. v. Pub. Util.
Comm’n, 962 S.W.2d 207, 214 (Tex. App.—Austin 1998, pet. denied)
(interpreting the clear language of section 2003.049(g) to reflect a legislative
intent to give the Public Utility Commission more authority to revisit the
complex, objective facts that it handles). Petitioners point out that the Public
Utility Commission’s grant of authority, and others like it, explicitly state that
the authority to change findings of fact is “[n]otwithstanding Section 2001.058”
or other contrary law. See TEX. GOV’T CODE § 2003.049(g); TEX. TRANSP. CODE
§ 201.112(c). Section 2003.047 does not include such language. But that does
not negate the inconsistency between Sections 2003.047(m) and 2001.058(e).
And as Section 2003.047(n) makes clear, only the provisions of Chapter 2001
that are consistent with Section 2003.047 apply to contested case hearings for
TCEQ.
63 TEX. GOV’T CODE § 2003.047(m).
64See Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.
2009) (“Where text is clear, text is determinative of [legislative] intent.”).
23
record and explains itself. This specific grant conflicts with the general
grant of narrow authority found in Section 2001.058(e), which only
allows agencies to amend certain findings and only for certain reasons.
We therefore hold that Section 2003.047(m) governs in this case. Under
Section 2003.047(m), TCEQ has the authority to alter “any” finding of
fact so long as it is based on the record. That is what TCEQ did here.
2
Petitioners also argue that, even under Section 2003.047(m),
TCEQ does not have the authority to make additional findings of fact.
An agency only has those powers conferred upon it by the
Legislature. 65 Accordingly, an agency may only amend a proposal for
decision by adding a finding of fact when the Legislature grants the
agency that authority. Applying this principle in Montgomery
Independent School District v. Davis, we held that a statute authorizing
a school board to “reject or change a finding of fact made by [a] hearing
examiner . . . only if the finding of fact is not supported by substantial
evidence” does not include the authority to find additional facts. 66
Similarly, the Third Court of Appeals has held that Section 2001.058(e)
does not authorize an agency to make additional findings of fact. 67
Here, the authorizing statute is different. Instead of only allowing
TCEQ to change a finding of fact, Section 2003.047(m) allows TCEQ to
65 See Pub. Util. Comm’n v. City Pub. Serv. Bd., 53 S.W.3d 310, 316 (Tex.
2001).
66 34 S.W.3d 559, 563 (Tex. 2000).
Hyundai Motor Am. v. New World Car Nissan, Inc., 581 S.W.3d 831,
67
841-842 (Tex. App.—Austin 2019, no pet.).
24
“amend the proposal for decision, including any finding of fact”. 68 A
proposal for decision is the entire explanation for SOAH’s
recommendation, containing “a statement of the reasons for the
proposed decision and of each finding of fact and conclusion of law
necessary to the proposed decision.” 69 This grant of authority to “amend”
the PFD as a whole encompasses the ability to add to the PFD’s
constituent parts and authorizes TCEQ to make additional findings of
fact based on the record. 70
3
Petitioners next challenge TCEQ’s explanation of its changes to
the PFD. Section 2001.058(e) requires an agency to “state in writing the
specific reason and legal basis for a change made under this
subsection.” 71 Petitioners argue that Section 2001.058(e)’s explanation
requirement applies. But again, TCEQ exercises its authority to amend
a PFD by virtue of Section 2003.047(m). On its face, the explanation
requirement of Section 2001.058(e)—which only applies to changes
68 TEX. GOV’T CODE § 2003.047(m) (emphasis added).
69 Id. § 2001.062(c).
70 See, e.g., Amend, BLACK’S LAW DICTIONARY (11th ed. 2019) (“to
formally alter . . . by striking out, inserting, or substituting words.” (emphasis
added)). Indeed, the legislation enacting Section 2003.047(m) makes it obvious
that the Legislature understands the authority to “amend” as including the
ability to add a part within the whole: “Chapter 2003, Government Code, is
amended by adding Section[] 2003.047”. Act of Sept. 1, 1995, 74th Leg., R.S.,
ch. 106, § 1, 1995 Tex. Gen. Laws 898, 898 (emphasis added).
71 TEX. GOV’T CODE § 2001.058(e).
25
“made under [Section 2001.058(e)]” 72—does not apply when the change
is made under Section 2003.047(m).
TCEQ still must comply with Section 2003.047(m). The
touchstone for agency action is reasoned decision-making. When viewed
as a whole, the agency’s order should “inform the parties and the courts
of the basis for the agency’s decision so that the parties may intelligently
prepare an appeal and so that the courts may properly exercise their
function of review.” 73 Accordingly, Section 2003.047(m) requires that
any amendment that TCEQ makes to a PFD “be accompanied by an
explanation of the basis of the amendment.” 74 Petitioners argue that
TCEQ’s explanation in its final order was inadequate.
In explaining its amendments, TCEQ clearly identified the
changes it made, cited to TexCom’s extensive and detailed exceptions to
the PFD, and explicitly distilled its rationale for granting the permits.
TCEQ emphasized SOAH’s determination that “there would be no
[natural] pathway for the waste to migrate” to a source of fresh water.
For contamination to occur, TCEQ explained that “Denbury would have
to receive authorization for their carbon dioxide enhancement recovery
operations”. TCEQ determined these operations were “speculative”.
Turning to the public-interest requirement, TCEQ explained its
conclusion that the Conroe water treatment plant was not a reasonably
available alternative—a key finding that the TCEQ reversed. TCEQ
noted that “90% of Montgomery County’s existing commercial
72 Id. (emphasis added).
73 Goeke v. Hous. Lighting & Power Co., 797 S.W.2d 12, 15 (Tex. 1990).
74 TEX. GOV’T CODE § 2003.047(m).
26
nonhazardous waste is going outside of the county for disposal”, despite
the existence of the Conroe treatment plant.
This explanation section adequately provided TCEQ’s bases of
disagreement with SOAH’s analysis. It allowed petitioners to
intelligently prepare their appeal, and has allowed two, now three,
reviewing courts to examine TCEQ’s evidentiary basis for granting
TexCom’s permits. When viewed as a whole, TCEQ’s explanation
satisfied Section 2003.047(m)’s explanation requirement.
B
Petitioners next argue that various elements of TCEQ’s order are
not supported by substantial evidence. We must reverse or remand an
agency decision “if substantial rights of the appellant have been
prejudiced because the administrative findings, inferences, conclusions,
or decisions are . . . not reasonably supported by substantial evidence
considering the reliable and probative evidence in the record as a
whole”. 75 In conducting this review, we “may not substitute [our]
judgment for the judgment of the state agency on the weight of the
evidence”. 76 We must uphold the agency’s ultimate decision if the
evidence “is such that reasonable minds could have reached the
conclusion that the agency must have reached in order to justify its
action.” 77 The agency’s decision is “presumed to be supported by
75 Id. § 2001.174(2)(E).
76 Id. § 2001.174.
77Tex. Health Facilities Comm’n v. Charter Med.-Dall., Inc., 665 S.W.2d
446, 453 (citing Suburban Util. Corp. v. Pub. Util. Comm’n, 652 S.W.2d 358,
364 (Tex. 1983)); see also Maverick County, 642 S.W.3d at 544 (“The true test
27
substantial evidence, and the burden is on the contestant to prove
otherwise.” 78
Under Section 2001.174(2) of the APA, two conditions must be
met before a reviewing court reverses or remands an agency decision.
Not only must the agency’s challenged “findings, inferences, conclusions,
or decisions” be faulty as a matter of law; 79 they must also prejudice the
substantial rights of the appellant. 80 If an agency’s decision is based on
sufficient underlying findings that are supported by substantial
evidence, then unnecessary findings cannot render that decision
reversible, even if those findings are improper. 81 This is because, even
without the improper findings, the agency’s decision still stands on
substantial evidence. An improper, but superfluous, finding does not
prejudice the substantial rights of the appellant.
In this case, TCEQ made the statutorily required determination
that TexCom’s injection-well operation would be protective of ground
and surface water, as required by statute. 82 TCEQ supported this
determination on three basic grounds: (1) the Cockfield Formation as a
is not whether the agency reached the correct conclusion, but whether some
reasonable basis exists in the record for the action taken by the agency.”
(quoting Charter Med.-Dall., Inc., 665 S.W.2d at 452)).
78 Maverick County, 642 S.W.3d at 547 (quoting Charter Med.-Dall.,
Inc., 665 S.W.2d at 453).
79 TEX. GOV’T CODE § 2001.174(2).
80 Id.
81 See Charter Med.-Dall., Inc., 665 S.W.2d at 453 (holding that
substantial evidence supported an agency’s order despite the fact “that many
of the [agency’s] 213 findings . . . [were] improper and irrelevant”).
82 TEX. WATER CODE § 27.051(a)(3).
28
whole is sealed off from water resources, making it a geologically
suitable injection zone; (2) under current circumstances, waste injected
into the Lower Cockfield would not migrate out of the Lower Cockfield;
and (3) even if migration did occur, Denbury’s operations would not
pump the wastewater to the surface.
Petitioners do not contest the Cockfield’s geological suitability.
Instead, petitioners challenge the migration finding, contending that
TCEQ ignored evidence that Denbury’s current operations would cause
migration, not just its future operations.
Petitioners are correct that evidence in the record supports their
argument that Denbury’s current operations create pressure sinks that
will pull waste from the Lower Cockfield to the Upper. But this evidence
was disputed. The record contains testimony from multiple experts who
concluded that the shale layer between the Lower Cockfield and the
Middle Cockfield was persistent and would not allow fluid flow. Indeed,
the PFD itself contained contradictory findings on this point, with
SOAH finding at one point that “[t]he injected wastewater . . . would
remain contained in the Lower Cockfield” and “would not impair any
existing mineral rights given the geological structure of the site.” And
the expert who testified that the waste would migrate out of the Lower
Cockfield towards the pressure sinks in the Upper Cockfield did not
support this theory of migration with any modeling, maps, or
calculations. Finally, modeling indicated that a decade of oil production
in the Upper Cockfield had not impacted the pressure in the Lower
Cockfield, signaling that the layers are not in communication.
29
In its order, TCEQ took this conflicting evidence, weighed it, and
determined that the waste would not migrate under current conditions.
TCEQ supported its migration finding as follows: According to TCEQ,
the Lower Cockfield is separated from the rest of the formation by a
30- to 40-foot shale layer that would prevent injected wastewater from
migrating to the Middle or Upper Cockfield. TexCom adequately
accounted for artificial penetrations through this shale layer. The only
place with possible communication between the Cockfield layers was at
a possibly transmissive fault, located 4,400 feet from the wellbore.
Modeling based on current geological conditions showed that the waste
would travel a maximum of just 2,770 feet from the wellbore in the
lifetime of TexCom’s operation, leaving it far short of the fault.
We hold that this evidence, which is supported in the record, is
substantial. While conflicting evidence exists, it is not for a court to
“substitute its judgment for the judgment of the state agency on the
weight of the evidence on questions committed to agency discretion”. 83
This migration finding, combined with the injection zone’s geological
suitability, 84 is sufficient to support TCEQ’s ultimate finding that the
wells would be protective of water. We need not address TCEQ’s findings
83 TEX. GOV’T CODE § 2001.174; see Maverick County, 642 S.W.3d at 544.
84 We note that a finding of geological suitability is a separate
regulatory requirement that calls for “a determination that the geology of the
area can be described confidently and that limits of waste fate and transport
can be accurately predicted”. 30 TEX. ADMIN. CODE § 331.121(c)(2). Petitioners
concede that “in [this] case, problems exist not due to the lack of geological
suitability”.
30
about the consequences of migration, if it were to occur, as any error in
these findings does not prejudice the petitioners’ substantial rights.
* * * * *
Accordingly, the judgment of the court of appeals is affirmed.
Nathan L. Hecht
Chief Justice
OPINION DELIVERED: June 10, 2022
31