Texas Commission on Environmental Quality and Max Midstream, LLC v. San Antonio Bay Estuarine Waterkeeper, Texas Campaign for the Environment, and S. Diane Wilson

ACCEPTED 15-24-00036-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 3/28/2025 5:03 PM NO. 15-24-00036-CV CHRISTOPHER A. PRINE CLERK FILED IN IN THE FIFTEENTH COURT OF APPEALS AUSTIN,OF 15th COURT APPEALS TEXAS AUSTIN, TEXAS 3/28/2025 5:03:07 PM CHRISTOPHER A. PRINE Clerk TEXAS COMMISSION ON ENVIRONMENTAL QUALITY and MAX MIDSTREAM, LLC, Appellants, v. S. DIANE WILSON, TEXAS CAMPAIGN FOR THE ENVIRONMENT AND SAN ANTONIO BAY ESTUARINE WATERKEEPER, Appellees.

On Appeal from the 201st Judicial District Court, Travis County, Texas Cause No. D-1-GN-22-002153 APPELLEES’ MOTION FOR REHEARING

Erin Gaines, Bar No. 24093462 Ilan Levin, Bar No. 00798328 Earthjustice Karis Adams, Bar No. 24131210 Texas Avenue, Suite 200 Ethan Siegel, Bar No. 24124647 Houston, Texas 77002 Texas RioGrande Legal Aid Phone: (512) 720-5354 4920 Interstate 35 [email protected] Austin, Texas 78751-2717 Phone: (512) 619-7287 [email protected] Attorney for Appellees Texas Campaign for [email protected] the Environment & San Antonio Bay [email protected] Estuarine Waterkeeper Attorneys for Appellee S. Diane Wilson TABLE OF CONTENTS Table of Authorities ................................................................................................... ii I. Argument ...........................................................................................................1 A. The Court erred by not ruling on the second claim challenging the Commission’s issuance of Max Midstream’s minor source air permit. .................1 i. Appellees raised two independent claims at the district court and Appellants appealed both claims to the Court of Appeals. .................................1 ii. This Court’s Opinion failed to address the second claim, which is necessary to final disposition of this appeal .......................................................5 II. Prayer..............................................................................................................7 CERTIFICATE OF COMPLIANCE ....................................................................9 CERTIFICATE OF SERVICE ............................................................................10 i TABLE OF AUTHORITIES Page(s) Cases Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998)...................................................................................6 Sloan v. Law Office of Oscar C. Gonzalez, Inc., 479 S.W.3d 833 (Tex. 2016) ................................................................................ 7 Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440 (Tex. 1993) ................................................................................6 Texas Comm'r of Educ. v. Solis, 562 S.W.3d 591 (Tex. App.—Austin 2018) ......................................................... 3 Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) ................................................................................ 6 United Indep. Sch. Dist. v. Mayers, 665 S.W.3d 775 (Tex. App.—San Antonio 2023) ............................................... 7 Statutes Texas Health and Safety Code § 382.032 ..............................................................3, 5 Other Authorities 35 Tex. Reg. 5198 (June 18, 2010) ............................................................................ 4 40 Tex. Reg. 9651 (Dec. 25, 2015) ........................................................................4, 6 Tex. R. App. P. 47.1...............................................................................................1, 7 ii TO THE HONORABLE JUSTICES OF THE FIFTEENTH COURT OF APPEALS: I. Argument This case involves two independent claims. The Court’s February 27, 2025 Opinion addressed Appellants’ first claim on appeal (Appellees’ first claim in the district court), reversing the judgment of the district court and rendering judgment affirming the Commission’s Order. Opinion at 25. However, the Court declined to rule on the second claim without a clear explanation. Because this claim was necessary to final disposition of the appeal, the Court erred in not reaching it. Tex. R. App. P. 47.1 (“The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.”).

A. The Court erred by not ruling on the second claim challenging the Commission’s issuance of Max Midstream’s minor source air permit.

i. Appellees raised two independent claims at the district court and Appellants appealed both claims to the Court of Appeals.

The Commission’s Order at issue in this case 1) denied all contested case hearing requests and 2) issued minor source air permit 162941 to Max Midstream (“the Permit”). AR 64. 1 At the district court, Appellees S. Diane Wilson, San

Appellees will cite to the Administrative Record (AR) and Supplemental Administrative Record (SAR), which are Joint Exhibits 1 & 2 to the Reporter’s Record (RR), in the following form: “(S)AR[Item number] at [pdf page number(s) of that Item].” Citations to the Clerk’s Record will Antonio Bay Estuarine Waterkeeper, and Texas Campaign for the Environment brought two distinct claims challenging this Order, each of which provided an independent basis for reversal of the Order: - Appellees’ First Claim: The Commission erred by denying Appellees’ requests for a contested case hearing on Max Midstream’s air permit.

CR at 32–33.

- Appellees’ Second Claim: The Commission erred by issuing a minor source air permit to Max Midstream. CR at 33.

The Commission filed a partial plea to the jurisdiction in the district court asserting the court lacked jurisdiction over Appellees’ second claim. CR at 127– 134. After a combined hearing on the plea to the jurisdiction and on the merits, the district court ruled in favor of Appellees on the first claim by reversing the Commission’s Order and remanding to the agency for a contested case hearing.

SCR at 3. The district court did not rule on the Commission’s plea to the jurisdiction regarding Appellees’ second claim and it did not need to. By ruling in favor of hearing requestors, the district court did not need to reach the second claim since the Commission’s Order had been reversed and the Permit would be subject to a contested case hearing.

On appeal, the Commission addressed Appellees’ second claim from the district court, asking this Court:

be “CR at [page number].” Citations to the Supplemental Clerk’s Record will be “SCR at [page number].”

Does the Court have jurisdiction to reach the merits of the Commission’s decision to issue Max Midstream’s permit? If so, was the Commission’s Order issuing the permit supported by substantial evidence and based upon applicable law and reasoned decision- making?

TCEQ Br. xxiv; see also MM Br. xv (Issue Presented #3).

All parties fully briefed this issue. See TCEQ Br. 48–55; MM Br. 43–54; Appellees Br. 48–62. The Commission and Max Midstream argued that this Court lacks jurisdiction to hear Appellees’ second claim challenging the Permit on the merits because they contend Appellees had not exhausted administrative remedies by participating in a contested case hearing. TCEQ Br. 48–51; MM Br. 44–47. In response, Appellees argued that Texas Health and Safety Code § 382.032 provides a right to judicial review and the plain language of the applicable statutory scheme and regulations requires a person to file a timely motion for rehearing to exhaust administrative remedies, but a contested case hearing is not a prerequisite for judicial review of an air permit. Appellees Br. 49–55; see also Texas Comm'r of Educ. v. Solis, 562 S.W.3d 591, 597–98, 602 (Tex. App.—Austin 2018, pet. denied) (holding the relevant statute did not require as a “jurisdictional prerequisite” that the aggrieved person participate in a hearing before the education board, even though that was an available option, because such a requirement would “impermissibly narrow the availability of the statutory right to appeal to the Commissioner”). Therefore, Appellees satisfied all exhaustion requirements, including filing a motion for rehearing before the Commission. Appellees Br. 51– 53.

This jurisdictional dispute has significant consequences. If, as this Court held in its February 27, 2025 Opinion, the Commission can “weigh and resolve disputed facts” in determining who is affected for a contested case hearing, and if this Court then denied Appellees judicial review of the merits of the Permit due to the Commission’s denial of the contested case hearing, as the Commission urges, this would appear to block all pathways for an independent review of air and water permits in Texas. This is contrary to Texas’ repeated legal statements to EPA that the right to judicial review of federally delegated permits in Texas is the same as it would be in federal court if EPA were operating the program. See 40 Tex. Reg. 9651, 9655 (Dec. 25, 2015) (MM Appx. T); see also 35 Tex. Reg. 5198, 5201 (June 18, 2010) (“[A]ny provisions of State law that limit access to judicial review do not exceed the corresponding limits on judicial review imposed by the standing requirements of Article III[.]”) (MM Appx. S).

The Commission’s unlawful issuance of the Terminal’s minor source permit harms Appellees by allowing construction of a major source of air pollution near where they live, work, fish, and recreate without the requisite public health and safety demonstrations. Appellees raised the following errors: first, the Commission’s Order authorizing the Terminal was based on an error of law because it applied the wrong major source threshold; and second, the Order was arbitrary and capricious because it (a) significantly underestimated the Terminal’s levels of harmful air pollution and (b) failed to include adequate pollution controls necessary to limit pollution below the applicable 100 tons per year threshold to be considered a minor instead of a major source. Appellees Br. 56–62.

ii. This Court’s Opinion failed to address the second claim, which is necessary to final disposition of this appeal.

This Court’s February 27, 2025 Opinion addressed the first claim regarding the Commission’s denial of Appellees’ hearing requests. Opinion at 25. However, the Court declined to rule on the second claim, stating briefly in a footnote that “[h]aving affirmed the Commission’s order, we need not address the Commission and Max Midstream’s issues asserting Appellees lacked standing to challenge the merits of the Commission’s order.” Opinion at 25, n.5.

The Opinion does not clearly state the Court’s basis for declining to address the second claim. The Commission’s determination that Appellees are not “affected persons” deserving of a contested case hearing is not equivalent to, and does not bind, a court’s independent determination of whether a party has standing to bring a claim in court. The Commission has admitted this point, stating in a rulemaking that “[a] finding by an ALJ or the commission concerning a person’s status as an affected person would not bind a Texas district court judge in considering that person’s standing to seek judicial review, under . . . THSC, §382.032, of the commission’s action on a permit application.” 40 Tex. Reg. 9651, 9656 (Dec. 25, 2015) (CR at 326, citing Pl. Amended APPX 22). Standing is a question of law decided by a court. Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). In addition, at the plea to the jurisdiction stage, courts cannot weigh disputed facts about jurisdiction that are intertwined with the merits against the plaintiff. Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004) (“[W]e simply require the plaintiffs, when the facts underlying the merits and subject matter jurisdiction are intertwined, to show that there is a disputed material fact regarding the jurisdictional issue.”).

All parties briefed the second claim on appeal, including the jurisdictional arguments related to exhaustion of administrative remedies and the merits of the Permit (see Section 1.A.i., supra). A ruling on this second claim is necessary to final disposition because if the Court agreed with Appellees that it has jurisdiction to rule on the merits of the Permit and it was improperly issued, the proper remedy would be for the Court to reverse the Order and remand to the Commission. That is, the Court could rule in favor of the Commission on the first claim regarding the denial of contested case hearing requests, but rule against the Commission on the second claim and reverse the Order on the merits of the Permit.

Therefore, this Court needed to reach the second claim. See Latham v. Castillo, 972 S.W.2d 66, 70 (Tex. 1998) (“The court of appeals erred by not discussing issues necessary to final disposition of the appeal.”); see also Sloan v. Law Office of Oscar C. Gonzalez, Inc., 479 S.W.3d 833, 834 (Tex. 2016) (“This Court has held that this provision is mandatory, and the courts of appeals are not at liberty to disregard it.”) (cleaned up); cf. United Indep. Sch. Dist. v. Mayers, 665 S.W.3d 775, 782 (Tex. App.—San Antonio 2023, no pet.) (rendering judgment dismissing claims based on lack of jurisdiction and declining to consider alternative arguments because the jurisdictional issue was “dispositive of [plaintiff’s] TCHRA claims”).

Therefore, the Court erred in not reaching this second claim. Tex. R. App. P. 47.1.

II. Prayer Appellees respectfully urge this Court to grant this motion for rehearing, address the second claim that all parties have briefed regarding the Commission’s issuance of the Permit, and reverse the Commission’s Order granting the Permit.

Alternatively, this Court should remand the case back to the district court to rule on the Commission’s partial plea to the jurisdiction on this second claim.

[Signature Block on Next Page]

Respectfully submitted, /s/ Erin Gaines Erin Gaines, Bar No. 24093462 Earthjustice Texas Avenue, Suite 200 Houston, Texas 77002 Phone: (512) 720-5354 [email protected] Attorney for Appellees Texas Campaign for the Environment & San Antonio Bay Estuarine Waterkeeper

/s/ Ilan Levin Ilan Levin, Bar No. 00798328 Karis Adams, Bar No. 24131210 Ethan Siegel, Bar No. 24124647 Texas RioGrande Legal Aid 4920 Interstate 35 Austin, Texas 78751-2717 Phone : (512) 619-7287 [email protected] [email protected] [email protected] Attorneys for Appellee S. Diane Wilson

CERTIFICATE OF COMPLIANCE Pursuant to TEX. R. APP. P. 38.1, the undersigned certifies this motion complies with the type-volume limitations because this motion contains 1,666 words as determined by Microsoft 365 application Word Count, exclusive of exempted portions in TEX. R. APP. P. 9.4(i)(2)(D).

Dated: March 28, 2025 /s/ Erin Gaines Erin Gaines

CERTIFICATE OF SERVICE I hereby certify that on this 28th day of March 2025, a true and correct copy of this APPELLEES’ MOTION FOR REHEARING was electronically served upon the following counsel of record via the Court’s electronic filing system: Sara J. Ferris Derek Seal Assistant Attorney General McGinnis Lockridge LLP Office of the Attorney General [email protected] [email protected] April Lucas Erin K. Snody McGinnis Lockridge LLP Assistant Attorney General [email protected] Office of the Attorney General [email protected] Jordan Mullins McGinnis Lockridge LLP Attorneys for Appellant, Texas [email protected] Commission on Environmental Quality Attorneys for Appellant, Max Midstream LLC

/s/ Erin Gaines Erin Gaines

Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Erin Gaines on behalf of Erin Gaines Bar No. 24093462 [email protected] Envelope ID: 99040107 Filing Code Description: Motion for Rehearing Filing Description: APPELLEES MOTION FOR REHEARING Status as of 3/31/2025 7:54 AM CST Associated Case Party: Max Midstream, LLC Name BarNumber Email TimestampSubmitted Status Derek Seal [email protected] 3/28/2025 5:03:07 PM SENT Jordan Mullins [email protected] 3/28/2025 5:03:07 PM SENT April Lucas [email protected] 3/28/2025 5:03:07 PM SENT Kim McBride [email protected] 3/28/2025 5:03:07 PM SENT

Associated Case Party: Texas Commission on Environmental Quality Name BarNumber Email TimestampSubmitted Status Annalisa Guartuche [email protected] 3/28/2025 5:03:07 PM SENT Sara Ferris [email protected] 3/28/2025 5:03:07 PM SENT David Laurent [email protected] 3/28/2025 5:03:07 PM SENT Erin Snody [email protected] 3/28/2025 5:03:07 PM ERROR

Associated Case Party: San Antonio Bay Estuarine Waterkeeper Name BarNumber Email TimestampSubmitted Status Erin Gaines [email protected] 3/28/2025 5:03:07 PM SENT Michelle Carlos [email protected] 3/28/2025 5:03:07 PM SENT Claire Huebler [email protected] 3/28/2025 5:03:07 PM SENT Ilan Levin [email protected] 3/28/2025 5:03:07 PM SENT

Case Contacts Name BarNumber Email TimestampSubmitted Status Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Erin Gaines on behalf of Erin Gaines Bar No. 24093462 [email protected] Envelope ID: 99040107 Filing Code Description: Motion for Rehearing Filing Description: APPELLEES MOTION FOR REHEARING Status as of 3/31/2025 7:54 AM CST Case Contacts Name BarNumber Email TimestampSubmitted Status Colton Halter [email protected] 3/28/2025 5:03:07 PM SENT Debbie Trevino [email protected] 3/28/2025 5:03:07 PM SENT

Associated Case Party: Texas Campaign for the Environment Name BarNumber Email TimestampSubmitted Status Erin Gaines [email protected] 3/28/2025 5:03:07 PM SENT Michelle Carlos [email protected] 3/28/2025 5:03:07 PM SENT Claire Huebler [email protected] 3/28/2025 5:03:07 PM SENT Ilan Levin [email protected] 3/28/2025 5:03:07 PM SENT

Associated Case Party: S.DianeWilson Name BarNumber Email TimestampSubmitted Status Ethan Siegel [email protected] 3/28/2025 5:03:07 PM SENT Karis Adams [email protected] 3/28/2025 5:03:07 PM SENT

Associated Case Party: Calhoun Port Authority Name BarNumber Email TimestampSubmitted Status Petrus J.Wassdorf [email protected] 3/28/2025 5:03:07 PM SENT Michael Woodward 21979300 [email protected] 3/28/2025 5:03:07 PM SENT Barton Hejny 24082231 [email protected] 3/28/2025 5:03:07 PM SENT Alan Sanders [email protected] 3/28/2025 5:03:07 PM SENT Automated Certificate of eService This automated certificate of service was created by the efiling system.

The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Erin Gaines on behalf of Erin Gaines Bar No. 24093462 [email protected] Envelope ID: 99040107 Filing Code Description: Motion for Rehearing Filing Description: APPELLEES MOTION FOR REHEARING Status as of 3/31/2025 7:54 AM CST Associated Case Party: Texas Oil & Gas Association Name BarNumber Email TimestampSubmitted Status Samia Broadaway 24088322 [email protected] 3/28/2025 5:03:07 PM SENT Beau Carter [email protected] 3/28/2025 5:03:07 PM SENT