TCEQ Ignored Project’s Oil & Gas Impact, Local Gov’ts Say
By Michael Phillis

Law360
July 9, 2019

excerpts…

….The governments also said the majority got it wrong when it refused to rule that the TCEQ improperly changed the administrative law judges’ findings on the geologic nature of the formation at the site and other issues. In the motion, they said the majority gave the agency too much leeway, effectively allowing it to act “as its own factfinder.”…

…“This is going to give the TCEQ commissioners free reign to change any findings of fact without justification because that is exactly what the court allowed them to do in this case,” Beal told Law360 around the time the decision was released.

He said that in these kinds of cases, the facts are everything and are often based on expert testimony.

“If they have total ability to redetermine the facts that is really scary,” he said.

In a dissent from the panel ruling, Justice Chari Kelly said the majority should have applied a stricter standard and forced TCEQ to provide specific reasoning for the changes it made to the judges’ findings….

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A Texas county and city told a state appellate court it overlooked red flags when it affirmed the Texas Commission on Environmental Quality’s approval of an industrial waste disposal facility, saying the project will negatively impact nearby oil and gas drilling.

Montgomery County and the City of Conroe asked the Third Court of Appeals on Monday to review en banc a panel’s split decision in May that upheld a permit for TexCom Gulf Disposal LLC to build underground injection wells as part of a wastewater disposal facility. The governments argue the panel wrongly affirmed the TCEQ’s permit despite concerns raised by the Texas Railroad Commission that the project would harm neighboring oil and gas assets.

The governments say the panel majority reached conclusions that weren’t supported by the record when it rejected concerns the construction of underground injection wells in Montgomery County by TexCom would harm nearby energy projects.

“The majority’s holding allows the permitting of an injection well that will endanger and injure a known oil and gas reservoir and threaten water supplies,” they said. “It does so despite RRC’s determination that the injected waste will not remain confined in the geologic unit into which it will be emplaced thus causing the waste of oil and gas.”

The panel concluded in May that the court should defer to TCEQ’s explanation for the permit.

For the TCEQ to approve a project like the one at issue, the RRC must provide a “no harm” letter declaring the project won’t interfere with nearby oil and gas deposits. The RRC initially issued a no harm letter in 2005 that was used by the TCEQ to approve the permit but the RRC eventually moved to rescind the letter. The appeals court said the RRC’s reversal came too late to compel the TCEQ to reject the permit.

In the motion for rehearing, the governments said the RRC issued its order rescinding its no harm letter before TCEQ’s approval of TexCom’s project. The TCEQ was made aware of that move and then “TCEQ ignored this development.” And when the rehearing petition filed by TexCom was later denied, the TCEQ was told about that, too, but it nevertheless refused to alter its outcome.

The governments also said the majority got it wrong when it refused to rule that the TCEQ improperly changed the administrative law judges’ findings on the geologic nature of the formation at the site and other issues. In the motion, they said the majority gave the agency too much leeway, effectively allowing it to act “as its own factfinder.”

“These were 180-degree changes from the [administrative law judges’] findings,” they said.

For example, the administrative law judges said if TexCom’s wastewater moves to a certain area it “could eventually” be “pumped to the surface through Denbury’s production wells.” The TCEQ changed “could eventually” to “would not.” The challengers said this change wasn’t sufficiently supported but the majority disagreed.

“The parties presented conflicting evidence about the migration of fluids” and other issues, the majority said. “Although there was conflicting evidence, we conclude that the record also supports the TCEQ’s changes.”

Ron Beal, a professor at Baylor who specializes in Texas administrative law, filed an amicus brief in May arguing against the majority’s decision. He said the majority got it wrong and gave the TCEQ too much leeway to be free of the administrative law judges’ work.

“This is going to give the TCEQ commissioners free reign to change any findings of fact without justification because that is exactly what the court allowed them to do in this case,” Beal told Law360 around the time the decision was released.

He said that in these kinds of cases, the facts are everything and are often based on expert testimony.

“If they have total ability to redetermine the facts that is really scary,” he said.

In a dissent from the panel ruling, Justice Chari Kelly said the majority should have applied a stricter standard and forced TCEQ to provide specific reasoning for the changes it made to the judges’ findings.

The TCEQ and the local governments did not immediately respond to requests for comment.

Justices Jeff Rose, Melissa Goodwin and Chari L. Kelly sat on the panel for the Third Court of Appeals.

Montgomery County and the city of Conroe are represented by Andrew S. “Drew” Miller, Deborah C. Trejo and Mark Osborn of Kemp Smith LLP.

The TCEQ is represented by the Texas Office of the Attorney General.

The case is Dyer et al. v. Texas Commission on Environmental Quality et al., case number 03-17-00499, in the Texas Court of Appeals for the Third District.

–Editing by Amy Rowe.