On February 11, 2022, in TCEQ and Dos Repúblicas Coal Partnership v. Maverick County, the Texas Supreme Court established critical precedent on administrative law principles and the faithful application of the law. Texas mine owner and operator Dos Repúblicas, represented by Appellate Practice Chair Jennifer Caughey and her team, prevailed. The appeal turned on whether regulatory text would be interpreted in accordance with its plain terms, or instead whether—contrary to the rules’ stated requirements and risking instability across the State—mere contract operators across Texas would now need to go through the wastewater permitting process. The opinion also addressed the level of deference afforded to an agency’s factual findings in core areas of agency expertise. Dos Repúblicas secured a unanimous reversal of the Court of Appeals on both grounds.
The case, on petition for review from the Third Court of Appeals, originated in 2013, after the Texas Commission on Environmental Quality (TCEQ) granted an application by Dos Repúblicas to renew and amend its longstanding wastewater permit for Eagle Pass Mine. Following a contested case hearing, TCEQ granted the mine’s permit, concluding that Dos Repúblicas qualified as both the mine’s permit-seeking owner and operator, defined as the entity responsible for “overall operations” of the facility. The City of Eagle Pass and Maverick County challenged the application for the permit. They argued, among other things, that contractor Camino Real Fuels LLC was the mine’s true operator and a necessary permit applicant. The Court of Appeals agreed, concluding that Camino Real’s absence from the application rendered the original permit application incomplete and the permit improper.
The Texas Supreme Court reversed the judgment of the Court of Appeals, ruling in Dos Repúblicas’s favor. The Court then remanded on additional issues argued by the TCEQ.
The Texas Supreme Court first addressed who must apply for wastewater permits under Texas law—and particularly if the word “operator” would be afforded its definition set forth in the agency rule. Although the relevant rule requires that only an owner and operator (defined as an entity “responsible for the overall operation of the facility”) of a facility be permitted, the Court of Appeals held that a mere contractor had to be a party listed on the application, undoing decades of settled law for these type permits. This ruling risked upsetting a wide range of permits across Texas.
The Texas Supreme Court disagreed with the appellate court’s approach to the interpretation of the regulatory language. It unanimously ruled that the words contained in the TCEQ rule controlled. As the Texas Supreme Court emphasized, the TCEQ’s rules state that the “operator” is the entity “responsible for the overall operation” of the facility. The Court of Appeals incorrectly applied a different standard, departing from the rule’s plain terms.
The Texas Supreme Court also emphasized the deferential substantial evidence standard, explaining that—contrary to the Court of Appeals’ conclusion—there was substantial evidence to support the TCEQ’s determination that Dos Repúblicas qualified as the Mine’s operator for permitting purposes. As the Court reaffirmed, the relevant question under this standard is not whether the court would reach the same decision as the agency, but whether the agency’s determination is supported by evidence—in other words, whether the determination has some reasonable basis.
“We are thrilled about the unanimous decision in our client’s favor, and we are proud of our work at the Texas Supreme Court,” said Jackson Walker partner Jennifer Caughey, who argued the case on behalf of Dos Repúblicas in October 2021. “This is an important case, both for administrative law principles and for the faithful application of the law. The Supreme Court did an excellent job explaining the law on both and setting forth clear principles for courts and the public. The Supreme Court’s decision avoids widespread confusion as to Texas permitting. It promotes the rule of law. And it protects mines and entities that follow Texas’s rules and statutes.”
“This is an important case, both for administrative law principles and for the faithful application of the law. The Supreme Court did an excellent job explaining the law on both and setting forth clear principles for courts and the public.”
Caughey is a former Texas appellate judge. She leads the appellate team at Jackson Walker. Working with her were Ali Abazari, Leonard H. Dougal, Danica L. Milios, Michael J. Nasi, Peter C. Hansen, and Lisa R. Kost.
The case is Texas Commission on Environmental Quality and Dos Repúblicas Coal Partnership v. Maverick County et al., No. 19-1108, in the Supreme Court of Texas. For more information, view the Law360 articles “Texas Justices Side With TCEQ In Wastewater Permit Row” and “Texas Justices Won’t Revisit Coal Mine Permit Ruling” (subscription required).
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