Texas Commission on Environmental Quality and Republic Waste Services of Texas, Ltd. v. the City of Aledo and the City of Willow Park ( 2015 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-13-00113-CV
Texas Commission on Environmental Quality and
Republic Waste Services of Texas, Ltd., Appellants
v.
The City of Aledo and The City of Willow Park, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-GV-12-000220, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING
MEMORANDUM OPINION
The Texas Commission on Environmental Quality and Republic Waste Services of
Texas, Ltd. appeal the trial court’s judgment in a suit filed by the City of Aledo and the City of
Willow Park (the Cities) seeking judicial review of the Commission’s final order issuing to Republic
a permit to construct and operate a new municipal solid waste transfer station in eastern Parker
County. At a preliminary hearing conducted by the State Office of Administrative Hearings (SOAH),
the Cities were denied party status in the contested case to consider issuance of the permit. In their
petition to the district court, the Cities contended that they were improperly denied party status and
that, accordingly, the Commission’s issuance of the permit was reversible error. The trial court
agreed and reversed the Commission’s final order, vacated Republic’s permit, and remanded the
matter to the Commission. For the following reasons, we reverse the district court’s judgment and
render judgment affirming the Commission’s final order issuing the permit.
BACKGROUND
Republic applied for a permit from the Commission to construct and operate a
municipal solid-waste transfer station,1 the Brazos Transfer Station. Republic planned to construct
the transfer station in an industrial subdivision in Parker County, outside the city limits of any
city but within Willow Park’s extraterritorial jurisdiction (ETJ), and planned to have buffer
zones—areas free from processing activities—around the facility between 95 and 400 feet wide.
After determining Republic’s permit application to be administratively complete,
the Commission referred the application to SOAH for a contested case. As required by law and
Commission rules, Republic published notice in local newspapers and to interested persons,
including the Cities, that SOAH would conduct a “contested case hearing . . . similar to a civil trial
in state district court” and provided that “[t]o request to be a party, you must attend the hearing
and show you would be adversely affected by the application in a way not common to members
of the general public.” On the date specified in the notice, SOAH held a preliminary hearing in
Parker County to hear requests of people seeking to be admitted as parties to the contested-case
proceeding and to establish a procedural schedule.
As representatives and on behalf of their respective cities, the mayors of Aledo and
Willow Park, along with other persons and entities who opposed the transfer station, appeared at the
hearing and requested party status. After listening to each requestor’s testimony, the administrative
law judge (ALJ) granted party status to twelve requestors, but denied the requests by the mayors of
1
A transfer station is a facility where waste is unloaded from collection vehicles and briefly
held until it is reloaded onto larger long-distance transport vehicles for shipment to landfills or other
treatment or disposal facilities.
2
Aledo and Willow Park. The ALJ denied the Cities party status on two grounds: (1) neither had
demonstrated a justiciable interest in the permit application and (2) neither had demonstrated its
mayor’s requisite authority to represent it in the proceedings.
The ALJ conducted a full evidentiary hearing several months later, after which he
recommended that the Commission grant the Brazos Transfer Station permit. The Cities filed
exceptions to the ALJ’s recommendation, arguing that he had improperly denied them party status.
The Commission followed the ALJ’s recommendation with some modifications and issued its
final order and permit. The Cities filed motions for rehearing with the Commission, again alleging
error in the denial of party status. The motions were overruled by operation of law.
The Cities filed suit in Travis County District Court challenging the Commission’s
order based on their exclusion from party status. The trial court issued a judgment reversing the
order, vacating Republic’s permit, and remanding the matter to the Commission with instructions
for a new preliminary hearing. In its judgment, the trial court identified no specific reasons for its
reversal of the Commission’s final order. However, in a letter ruling to the parties, the trial court
indicated that it was relying, in part, on its sua sponte determination that the ALJ had violated the
Cities’ due-process rights by, among other errors, not permitting the admission of documentary
evidence at the preliminary hearing. In its final order vacating the Commission’s permit, the trial
court further ordered that should Republic wish to continue to pursue its permit application, “an
evidentiary hearing must be held before [SOAH] at which [the Cities] will be entitled to present
evidence relevant to determination of their status as affected persons entitled to participate as parties
in any contested case hearing on the [permit] application.” Both the Commission and Republic
appealed the judgment.
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DISCUSSION
Jurisdiction
In its first issue, Republic challenges the subject-matter jurisdiction of the district
court to consider the Cities’ petitions, arguing that because the Cities were not admitted as parties
to the contested-case proceeding from which they sought to appeal, they had not met (and could not
have met) the statutory prerequisites to filing an appeal under the Administrative Procedure Act
(APA). See Tex. Gov’t Code §§ 2001.003 (defining “party” as “person or state agency named or
admitted as a party” in contested case), .145(a) (motion for rehearing is prerequisite to administrative
appeal), .146(a) (motion for rehearing must be filed by “party”). Republic argues that because only
“parties” may file motions for rehearing and the Cities, by definition, were not “parties” under the
APA, their purported motions were nullities and did not fulfill the mandatory statutory prerequisite
to appeal. Having thus failed to exhaust their administrative remedies, Republic continues, the Cities
are not entitled to judicial review of the Commission’s order. See Temple Indep. Sch. Dist. v. English,
896 S.W.2d 167, 169 (Tex. 1995) (failure to timely file motion for rehearing deprives district court
of jurisdiction to review agency’s decision on appeal).
The Cities respond that section 5.351 of the Water Code governs jurisdiction over
their administrative appeal and that we must look to that statute for the parameters of entitlement to
judicial review. See Hooks v. Texas Dep’t of Water Res., 611 S.W.2d 417, 419 (Tex. 1981) (judicial-
review provisions of APA and Water Code should be read in conjunction and in harmony with each
other, and section 5.351 entitles person “affected” by agency action to judicial review); see also
Tex. Water Code § 5.351(a) (“A person affected by a ruling, order, decision, or other act of the
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commission may appeal the action by filing a petition in a district court of Travis County.”); Texas
Natural Res. Conservation Comm’n v. Sierra Club, 70 S.W.3d 809, 811 (Tex. 2002) (if agency’s
enabling statute specifically authorizes judicial review, its provisions govern procedures applicable
to judicial review of agency decision). The Cities argue that because section 5.351 does not limit
appeals to “parties” as does the APA, they are entitled to appeal despite not being admitted as parties
in the contested case. We agree with the Cities.
This Court has repeatedly allowed persons to appeal Commission actions without
having been designated as “parties” to proceedings at the agency, specifically when we have
considered whether a person was properly denied a contested-case hearing on the basis of a
determination that it was not an “affected party.” See Sierra Club v. Texas Comm’n on Envtl. Quality,
455 S.W.3d 214, 222-23 (Tex. App.—Austin 2014, pet. filed) (reviewing Commission’s determination
that entity was not “affected person” and resultant denial of entity’s request for contested-case
hearing under substantially similar statute in Health and Safety Code creating right to judicial
review); United Copper Indus., Inc. v. Grissom, 17 S.W.3d 797, 803-04 (Tex. App.—Austin
2000, pet. dism’d) (same); Heat Energy Advanced Tech., Inc. v. West Dallas Coal. for Envtl. Justice,
962 S.W.2d 288, 290-92 (Tex. App.—Austin 1998, pet. denied) (entity denied opportunity to
participate in contested-case proceeding on basis of Commission’s determination that it was not
“affected person” had standing to challenge said action in suit for judicial review under Water Code
section 5.351); cf. Coastal Habitat Alliance v. Public Util. Comm’n of Tex., 294 S.W.3d 276, 282
(Tex. App.—Austin 2009, no pet.) (where PURA was not silent on entitlement to judicial review
and permitted only “parties” to contested-case proceeding to obtain judicial review, entity denied
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right to intervene in agency proceedings had no right to judicial review). In light of Water Code
section 5.315’s grant of judicial review and this case law, we reject Republic’s argument that
because the Cities were not “parties” to the contested-case proceeding, they were not entitled to
judicial review. We overrule Republic’s first issue and conclude that the district court had subject-
matter jurisdiction over the Cities’ petition for judicial review.
Denial of party status
Joining in their third issues, appellants contend that the trial court erred in reversing
the Commission’s final order because the Commission did not commit any reversible error in
denying party status to the Cities and issuing the permit. See Tex. Gov’t Code § 2001.174(2)
(providing list of reversible errors for judicial review of agency decision in contested case). The
Cities respond that the Commission committed legal error and acted arbitrarily and capriciously in
accepting the ALJ’s determination that the Cities were not entitled to party status and that,
accordingly, the trial court properly reversed the Commission’s order and remanded the case for
further proceedings. See id. (court must reverse and remand case for further proceedings if
substantial rights of appellant have been prejudiced because administrative conclusions or decisions
are affected by error of law or are arbitrary and capricious). An agency acts arbitrarily and thus
abuses its discretion if in making a decision it commits any of the following errors: (1) omits from
its consideration a factor that the legislature intended the agency to consider in the circumstances;
(2) includes in its consideration an irrelevant factor; or (3) reaches a completely unreasonable result
after weighing only relevant factors. Sierra Club, 455 S.W.3d at 223; Reliant Energy, Inc. v. Public
Util. Comm’n of Tex., 62 S.W.3d 833, 841 (Tex. App.—Austin 2001, no pet.).
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As set out in the Water Code, the Commission is statutorily mandated to adopt rules
specifying factors “which must be considered in determining whether a person is an affected person
in any contested case arising under the air, waste, or water programs within the [C]ommission’s
jurisdiction and whether an affected person is entitled to standing in contested case hearings.”
Tex. Water Code § 5.115(a). That same section defines an “affected person” as someone “who has
a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest
affected by the administrative hearing.” Id. The section further specifies that “[a]n interest common
to members of the general public does not qualify as a personal justiciable interest.” Id. These same
definitions are mirrored in the Commission’s rules and made to explicitly apply in the context of
permit applications and the determination of whether a person is “affected.” See 30 Tex. Admin. Code
§ 55.203(a), (b) (2015) (Tex. Comm’n on Environmental Quality, Determination of Affected Person).
The Commission has adopted a list of non-exclusive factors that it must consider in
determining whether a person is “affected”:
(1) whether the interest claimed is one protected by the law under which the
application will be considered;
(2) distance restrictions or other limitations imposed by law on the affected interest;
(3) whether a reasonable relationship exists between the interest claimed and the
activity regulated;
(4) likely impact of the regulated activity on the health and safety of the person, and
on the use of property of the person;
(5) likely impact of the regulated activity on use of the impacted natural resource by
the person; and
(6) for governmental entities, their statutory authority over or interest in the issues
relevant to the application.
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Id. (c).
Beyond this list of factors and the requirement that a person demonstrate a “personal
justiciable interest . . . not common to members of the general public,” neither the Water Code nor
any Commission rules specify any particular procedure by which the Commission or an ALJ must
make the “affected person” determination regarding whether to admit a person as a party when the
Commission directly refers a permit application to SOAH for a contested-case hearing on the merits.
Cf. 30 Tex. Admin. Code §§ 55.201(c), (d), .209(c)-(e) (person requesting contested-case hearing
must file written request identifying person’s justiciable interest, including “brief, but specific,
written statement explaining in plain language the requestor’s location and distance relative to the
proposed facility or activity that is the subject of the application and how and why the requestor
believes he or she will be adversely affected by the proposed facility or activity in a manner not
common to members of the general public”). However, even in the situation of a direct referral to
SOAH for a contested-case hearing (as was the case here), a person seeking to be admitted as a party
nevertheless has the burden of making a minimum jurisdictional showing of a “justiciable interest.”
See Heat Energy, 962 S.W.2d at 295 (to be “affected person” entitled to participate in contested case,
party must show that it will potentially suffer harm or has justiciable interest related to proceedings).
While the showing of such interest need not be in writing (as opposed to the situation when a person
requests that the Commission hold a contested-case hearing), the only reasonable interpretation
of the applicable Commission rules and Water Code sections squarely places that burden of a
showing on the requesting person. See Tex. Water Code § 5.115(a) (defining affected person);
30 Tex. Admin. Code § 55.203(a), (b) (same).
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Moreover, the statutorily mandated notice that was issued to the Cities and other
potentially affected parties indicated such burden (“To request to be a party, you must attend the
hearing and show you would be adversely affected by the application in a way not common to
members of the general public.” (emphasis added)). While the Commission is required to consider
all of the relevant factors that are raised by a person seeking party status, the Cities have pointed to
no rule or statute requiring the Commission to request information from a hopeful “affected person”
on any one or more of the factors if such information is not offered. That burden of offering
evidence to support a showing on any given factor must necessarily rest on the person seeking to be
admitted as a party. If no showing is made on any one or more of the factors, there is nothing in the
statutes or rules placing the burden on the Commission or ALJ to draw out from the person such
information. With this discussion of Cities’ minimum required showing, we turn to a review of the
administrative record.
At the beginning of the preliminary hearing, the ALJ explained that those seeking
party status would “need to be able to demonstrate that [they] have an interest that is more directly
or more significantly affected than the public” and explain why they should be granted party
status and that Republic and others would then have the opportunity to ask questions of the persons
seeking party status. Aledo and Willow Park were not represented by counsel at the hearing but
were represented by their respective mayors, appearing pro se on behalf of the cities.2
2
While the Commission makes passing reference in its brief to the rule in judicial proceedings
that a non-attorney may not appear in a representative capacity, it acknowledges that no rules
or statutes require organizations to be represented by counsel at administrative proceedings. See
Kunstoplast of Am., Inc. v. Formosa Plastics Corp., USA, 937 S.W.2d 455, 456 (Tex. 1996) (generally
corporations may be represented only by licensed attorney in judicial proceedings).
9
The record shows that Aledo’s mayor, Kit Marshall, made the following
representations to the ALJ regarding Aledo’s interest in the permit application: an elementary
school located within its city limits is about 1/2 mile from the proposed site; the residents who were
granted party status live within its extra-territorial jurisdiction (ETJ); the city has the duty to provide
services to areas within its ETJ and that residents within its ETJ have the capability to request
annexation in the future; the city has platting authority within the ETJ; and the city has “health and
safety issue concerns” about the proposed facility.3 Marshall referenced a resolution passed by the
city council that “pretty well establishes the reasons we would seek party status” and that allegedly
spoke to the “health and safety” issues involved. However, while Marshall offered to “read the
resolution,” she did not in fact read it, seek to admit it into evidence, or further elaborate on any of
the “reasons” for which the City sought party status.
The record shows that Willow Park’s mayor, Kenneth Hawkins, made the following
representations to the ALJ regarding Willow Park’s interest in the permit application: city-owned
properties in its ETJ contain water wells or proposed water wells, and such properties are as close
as 1/2 mile from the proposed site; the proposed site is within its ETJ; the facility would “cause a
high density volume of traffic to flow through [the City’s] main economic corridor”; and that
“there is a traffic safety issue because of the traffic problems [the City has] already.” Like Aledo’s
mayor, Hawkins also did not attempt to offer any demonstrative or other evidence at the hearing
beyond this testimony.
3
Aledo’s mayor also represented that the Aledo ISD (which was admitted as a party)
would adequately represent its interests in the contested-case proceedings.
10
While the Cities complain on appeal about the ALJ’s blanket refusal at the beginning
of the preliminary hearing to admit any documentary evidence into the record—allowing such
evidence for demonstrative purposes only—neither city attempted to offer any evidence into the
record for any purpose or objected to the ALJ’s decision on the matter. They have, therefore, waived
this issue on appeal. See El Paso Elec. Co. v. Public Util. Comm’n of Tex., 917 S.W.2d 846, 861
(Tex. App.—Austin 1995, writ dism’d by agr.) (failure to make evidentiary objection at administrative
hearing waives complaint in suit for judicial review). Furthermore, we have held that there is no
express right to an evidentiary hearing on the issue of “affected person” status as long as the
requestor was afforded its rights to express its dissatisfaction with the proposed permit and the
agency did not refuse to consider evidence offered in support of that dissatisfaction. See Sierra Club,
455 S.W.3d at 224. Despite the unobjected-to refusal of the ALJ to admit documentary evidence
into the record, there is no indication that he refused to consider any evidence that the Cities offered
to support their respective “affected persons” showings.
It is true that very early into Marshall’s testimony, counsel for Republic raised the
issue of whether the city council had specifically authorized the mayor to seek party status and
cross-examined her on that topic. Republic’s counsel argued to the ALJ that the Cities needed
explicit authority from their respective councils to seek party status, arguing that the authority the
mayors had received in council resolutions to oppose the permit by “any means possible” was not
enough. Because of this argument, the parties focused the party-status determination henceforth
primarily on this issue of explicit representative authority rather than their justiciable interests.
Nevertheless, neither city took the opportunity to elaborate on its alleged legally protected interests
and how those were not common to members of the general public.
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The above-cited representations constituted the entirety of both mayors’ allegations
about the Cities’ justiciable interests at the preliminary hearing. That neither City was represented
by counsel at the preliminary hearing does not excuse them from making the minimum threshold
showing of a justiciable interest. See Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184-85
(Tex. 1978) (pro se litigants are held to same standards as licensed attorneys and must comply
with applicable laws and rules of procedure). Although the ALJ ruled that he would not admit
documentary evidence at the preliminary hearing, he did allow various forms of evidence from other
parties for demonstrative purposes, and nothing prevented the mayors from relying on any evidence
not formally admitted in making their cases (for instance, referring to and reading a city council
resolution outlining concerns with the proposed permit).
In light of the minimal showings that each mayor made, we hold that the ALJ did not
act arbitrarily or abuse his discretion in concluding that neither city had a justiciable interest. Simply
put, neither city sufficiently demonstrated that any legally protected interests would likely be affected
by issuance of the permit or how those interests were not common to members of the general public.
Accordingly, the Commission did not err in determining that, on this record, the Cities did not
meet the threshold jurisdictional standing requirement to be granted party status. See West v. Texas
Comm’n on Envtl. Quality, 260 S.W.3d 256, 263-64 (Tex. App.—Austin 2008, pet. denied) (interim
orders of ALJ are subsumed within final order of Commission and appealable only when final order
becomes appealable). We sustain Republic and the Commission’s third issues.
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The mayors’ authority to seek party status on behalf of the Cities
The Cities contend that the district court properly reversed the Commission’s final
order because the Commission erred in finding that the mayors did not have authority to seek party
status on behalf of their respective cities and that the ALJ abused his discretion in denying the Cities
provisional party status and a continuance to seek proper authorization from their city councils.
However, the ALJ denied party status on the basis of two determinations—that the mayors had not
shown that they were authorized representatives permitted to seek party status on behalf of the Cities
and that they had not identified a justiciable interest—and we may affirm the Commission’s order
on the basis of either of those determinations, even if the other was erroneous. See Sensitive Care,
Inc. v. Texas Dept. of Human Servs., 926 S.W.2d 823, 828 (Tex. App.—Austin 1996, no writ) (“It
is . . . a general rule of administrative law that a reviewing court must uphold an agency decision on
any legal basis shown in the record, even though the agency may have stated an erroneous reason
for its decision.”). Because the ALJ properly denied party status to the Cities on the basis of their
failure to demonstrate a justiciable interest, we need not reach the propriety of his denial on the basis
of the mayors’ authority to seek party status or his denial of a continuance and provisional status.
Because of our disposition of the Commission and Republic’s third issues, we need not reach the
parties’ remaining issues on appeal.
CONCLUSION
The district court erred in reversing and vacating the Commission’s order issuing
Permit No. MSW-2356 to Republic. Accordingly, we reverse the district court’s final judgment
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and render judgment affirming the Commission’s final order and issuance of said permit in
Docket No. 2009-2058-MSW.
__________________________________________
David Puryear, Justice
Before Chief Justice Rose, Justices Puryear and Goodwin
Reversed and Rendered
Filed: July 8, 2015
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