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Dyer v. Texas Commission On Environmental Quality

Court of Appeals of Texas, Third District, Austin

October 11, 2019

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; Appellants
v.
Texas Commission on Environmental Quality; Bryan W. Shaw, in his official capacity as Chairman of the Texas Commission on Environmental Quality; Buddy Garcia and Carlos Rubinstein, in their official capacities as Commissioners of the Texas Commission on Environmental Quality; and TexCom Gulf Disposal, LLC, Appellees

          FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT NO. D-1-GN-11-001898, HONORABLE TIM SULAK, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Goodwin and Kelly.

          MEMORANDUM OPINION

          Melissa Goodwin, Justice.

         On this Court's motion, we withdraw our opinions and judgment issued on May 22, 2019, and substitute the following opinion and judgment in their place.

         Raising multiple issues, appellants 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 (Individual Appellants); Montgomery County; and the City of Conroe appeal from the trial court's final judgment that affirmed appellee Texas Commission on Environmental Quality's order granting appellee TexCom Gulf Disposal, LLC's application for permits to construct and operate underground injection control wells for the disposal of non-hazardous, industrial waste.[1] See Tex. Water Code § 27.051 (addressing issuance of permit for injection wells). The trial court also dismissed or, in the alternative, denied appellants' claims seeking declaratory relief. For the following reasons, we affirm the trial court's final judgment.

         BACKGROUND

         Statutory Framework

         To give context to the parties' dispute, we begin with a brief overview of the Injection Well Act, which governs the permitting process for underground injection wells in this State. See generally Tex. Water Code §§ 27.001-.157; Railroad Comm'n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 626 (Tex. 2011) (discussing Injection Well Act). Under the Injection Well Act, the Texas Commission on Environmental Quality (the TCEQ or the Commission) has jurisdiction over injection wells used for the disposal of "industrial and municipal waste," see Tex. Water Code §§ 27.011, .051(a), and the Railroad Commission has jurisdiction over injection wells used "to dispose of oil and gas waste," see id. §§ 27.031, .051(b).[2] The purpose of the act is "to maintain the quality of fresh water in the state to the extent consistent with public health and welfare and the operation of existing industries, taking into consideration the economic development of the state, to prevent underground injection that may pollute fresh water, and to require the use of all reasonable methods to implement this policy." Id. § 27.003.

         A company seeking to construct and operate an injection well to dispose of industrial and municipal waste must apply to the TCEQ for a permit. See id. § 27.051(a). Among the applicant's requirements, it must "submit with the application a letter from the [R]ailroad [C]ommission 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." Id. § 27.015(a). Until the applicant has provided the TCEQ with this "no-harm" letter from the Railroad Commission, "the [TCEQ] may not proceed to hearing on any issues other than preliminary matters such as notice." Id. § 27.015(b). If the Railroad Commission has issued a no-harm letter under subsection (a), the TCEQ "shall find that there will be no impairment of oil or gas mineral rights." Id. § 27.015(c).

         In granting an application for an injection well permit, the TCEQ's required findings include:

(1) that the use or installation of the injection well is in the public interest;
(2) that no existing rights, including, but not limited to, mineral rights, will be impaired;
(3) that, with proper safeguards, both ground and surface fresh water can be adequately protected from pollution; . . . .

Id. § 27.051(a)(1)-(3). In its public interest inquiry under subsection (a)(1), the TCEQ must consider specific criteria, including "whether there is a practical, economic, and feasible alternative to an injection well reasonably available," but the TCEQ may consider other factors as well. See id. § 27.051(d).

         Administrative Proceedings

         Appellant TexCom Gulf Disposal, LLC submitted its application to the TCEQ in August 2005.[3] See id. § 27.011; see also 30 Tex. Admin. Code § 39.651 (Tex. Comm'n on Environmental Quality, Application for Injection Well Permit).[4] TexCom sought to develop a commercial non-hazardous industrial wastewater disposal facility on an approximately 27-acre site in Montgomery County. TexCom's plans for the proposed facility included operating an existing injection well and constructing and operating up to three additional wells to dispose of non-hazardous, industrial wastewater. The existing well's permit had expired, and it had never been operated commercially.

         As part of its application, TexCom provided the TCEQ with a no-harm letter from the Railroad Commission dated September 16, 2005, which stated that, based on staff review, the Railroad Commission "[had] concluded that the operation of the proposed wells . . . will not injure or endanger any known oil or gas reservoir." See Tex. Water Code § 27.015(a). TexCom's proposed facility would be located within the Conroe Oil Field and would lie atop the Jackson Shale.[5] Below the Jackson Shale is the Cockfield Formation. The Cockfield Formation is comprised of lower, middle, and upper formations or members, and oil and gas has been produced from the Upper Cockfield Formation for over 70 years. TexCom's proposed "injection interval" was the Lower Cockfield Formation, and its proposed "injection zone" was the entire Cockfield Formation. See 30 Tex. Admin. Code § 331.2(56), (59) (Definitions).[6] The Jackson Shale is more than 1, 000-feet thick and would prevent any migration of fluids out of the Cockfield Formation in the area of review (AOR).[7] The underground sources of drinking water (USDWs) in the AOR lie above the Jackson Shale.

         The contested-case hearing on TexCom's permit application was held in December 2007. The evidence before the administrative law judges (ALJs) included the suitability of the proposed site geologically for injection wells, the known faults and artificial penetrations in the AOR, and the merit of injection wells to dispose of non-hazardous, industrial waste, generally and specifically as to TexCom's proposed wells, as compared with alternative disposal options, including available options in Montgomery County.[8] The evidence also included the Railroad Commission's 2005 no-harm letter, which was admitted without objection, but other evidence on the proposed injection wells' impact on mineral interests was limited. The lessee-operator of the mineral interests underlying TexCom's proposed site at the time did not seek party status and did not participate in the contested-case hearing. The ALJs issued a proposal for decision (PFD) in April 2008 recommending that the permits be granted with special conditions, but the TCEQ issued an interim order, remanding the matter to the State Office of Administrative Hearings (SOAH) in December 2008 for the parties to undertake additional modeling with more conservative assumptions and another hearing to receive evidence on the modeling, the public interest requirements, and alternative disposal options.[9]

         Denbury Onshore, LLC became the lessee-operator of the mineral interests underlying TexCom's proposed site in December 2009 and filed a motion to intervene in the contested case in March 2010. In its motion to intervene, Denbury contended that it was "actively producing oil and gas from the Cockfield Formation in the Conroe Field in the area" of TexCom's proposed facility and that TexCom's proposed operations were "incompatible with Denbury's operations to recover oil, gas and minerals from the Conroe Oil Sands; TexCom's injection activities will allow the injected fluids to migrate into the portions of the Cockfield from which Denbury is recovering oil and gas." Denbury's motion to intervene was granted, and it was designated a party in April 2010.

         In a separate matter before the Railroad Commission, the Railroad Commission notified TexCom and Denbury on June 14, 2010, that it would hold a hearing to address Denbury's request that the Railroad Commission withdraw the 2005 no-harm letter. Based on this notice from the Railroad Commission, Denbury filed a motion for continuance in the administrative proceeding in this case on June 15, 2010, the first day of the hearing on remand. Denbury requested abatement until after the Railroad Commission proceeding concerning the no-harm letter was completed. The ALJs denied Denbury's motion for continuance and proceeded with the hearing on remand.

         The ALJs primarily limited the evidence at the hearing on remand to the topics or subjects as directed by the TCEQ in its remand order. The evidence at the hearing on remand included evidence addressing: (i) TexCom's additional testing and reservoir modeling after the initial hearing, including the accuracy of its determinations of the "cone of influence" from its proposed injection of wastewater, the AOR, and faults and artificial penetrations within the AOR;[10](ii) available options for disposing of non-hazardous, industrial waste generated in Montgomery County; and (iii) TexCom's potential clients if it was allowed to proceed with its proposed facility. The parties presented conflicting evidence concerning the impact of Denbury's current oil and gas production and its future plans for CO2 enhanced oil recovery (EOR) activities in the Conroe Oil Field on TexCom's proposed injection of wastewater and the potential for wastewater injected by TexCom to migrate to drinking water formations based on Denbury's activities. At the time of the remand hearing in June 2010, one of Denbury's witnesses testified that Denbury was in the "planning stages still" and "approximately four years" away from conducting CO2 EOR activities in the Conroe Oil Field. Prior to beginning those activities, Denbury itself was required to obtain permits to drill and operate necessary wells, including the wells that would inject CO2 into the Cockfield Formation.[11]

         The ALJs issued an amended PFD after remand in November 2010. They recommended that TexCom's permit application be denied. Although they found that TexCom's proposed facility was in a "geologically suitable area," they found that Denbury's current and future operations "pose[d] a risk" that wastewater injected by TexCom "would be pumped to the surface from the injection zone," that Conroe's Publicly Owned Treatment Works (POTW) was a "reasonable alternative" to underground injection of wastewater, and that TexCom did not establish by a preponderance of the evidence that its proposed facility was in the public interest. The TCEQ, however, considered the application at an open meeting on January 26, 2011, issued an order on February 17, 2011, and then reissued the order on April 7, 2011, approving TexCom's application for the injection control well permits. The TCEQ modified approximately 20 of the ALJs' 266 findings of fact and 9 of the ALJs' 54 conclusions of law.

         Concerning the hearing before the Railroad Commission addressing the 2005 no-harm letter, the Railroad Commission Examiners held a hearing in August 2010. Both TexCom and Denbury participated in that hearing, and the Examiners issued a report and PFD in November 2010, recommending rescission of the no-harm letter. According to the Examiners' PFD, evidence was presented concerning Denbury's current and future plans for oil production in the Conroe Oil Field. Denbury attached a copy of the Railroad Commission Examiners' report and PFD to its exceptions to the ALJs' PFD on remand in the administrative proceeding in this case.

         Appellants also filed motions to include and supplement the record in the administrative proceeding in this case with the Railroad Commission's subsequent orders concerning the no-harm letter. The Railroad Commission adopted its Examiners' findings and conclusions and rescinded the no-harm letter in an order dated January 13, 2011. In the order, the Railroad Commission stated that the order would "not be final and effective until 20 days after a party is notified of the [Railroad] Commission's order" and that, "[i]f a timely motion for rehearing is filed by any party at interest, this order shall not become final and effective until such motion is overruled, or if such motion is granted, this order shall be subject to further action by the [Railroad] Commission." In an order dated March 8, 2011, the Railroad Commission partially granted TexCom's motion for rehearing as to the January 2011 order.[12] TexCom filed a subsequent motion for rehearing, which the Railroad Commission denied on April 18, 2011.

         Litigation Commenced

         Shortly after the TCEQ reissued its order on April 7, 2011, granting TexCom's permit application, appellants filed suits seeking declaratory relief and judicial review under the Administrative Procedure Act (APA) and the Texas Water Code. See Tex. Gov't Code § 2001.174 (addressing scope of judicial review); Tex. Water Code § 5.351 (authorizing judicial review of TCEQ orders); Tex. Civ. Prac. & Rem. Code §§ 37.001-.011 ("UDJA"). The trial court consolidated appellants' suits. The parties filed competing motions for partial summary judgment regarding the Railroad Commission's no-harm letter. The trial court granted appellees' motion for partial summary judgment, denied appellants' motion, and ordered that appellants' requests for declaratory relief regarding the no-harm letter were dismissed for want of jurisdiction or, in the alternative, denied.

         In June 2017, the trial court held a hearing on the merits. Following the hearing, the trial court affirmed the TCEQ's order and dismissed or, in the alternative, denied appellants' claims for declaratory relief. These appeals followed.

         ANALYSIS

         Standard of Review

         Our review of the TCEQ's final order is governed by section 2001.174 of the APA. See Tex. Gov't Code § 2001.174; Slay v. Texas Comm'n on Envtl. Quality, 351 S.W.3d 532, 548-49 (Tex. App.-Austin 2011, pet. denied) (discussing standard of review under section 2001.174 of APA). Under this standard, "a court may not substitute its judgment for the judgment of the state agency on the weight of the evidence or questions committed to agency discretion." Tex. Gov't Code § 2001.174; see Firemen's & Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984) ("The reviewing court is concerned only with the reasonableness of the administrative order, not its correctness."). But we must reverse or remand the case to the state agency 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.

Tex. Gov't Code § 2001.174(2).

         With respect to subsection (2)(E) of section 2001.174, "'substantial evidence' does not mean a large or considerable amount of evidence, but such relevant evidence as a reasonable mind might accept as adequate to support a conclusion of law." Slay, 351 S.W.3d at 549; see Texas State Bd. of Dental Exam'rs v. Sizemore, 759 S.W.2d 114, 116 (Tex. 1988). "Substantial-evidence analysis entails two component inquiries: (1) whether the agency made findings of underlying facts that logically support the ultimate facts and legal conclusions establishing the legal authority for the agency's decision or action and, in turn, (2) whether the findings of underlying fact are reasonably supported by evidence." AEP Tex. Commercial & Indus. Retail, Ltd. P'ship v. Public Util. Comm'n, 436 S.W.3d 890, 905 (Tex. App.-Austin 2014, no pet.).

         We presume that the agency's findings, inferences, conclusions, and decisions are supported by substantial evidence, and the burden is on the appellant to demonstrate otherwise. See Froemming v. Texas State Bd. of Dental Exam'rs, 380 S.W.3d 787, 791 (Tex. App.-Austin 2012, no pet.); Pierce v. Texas Racing Comm'n, 212 S.W.3d 745, 751 (Tex. App.-Austin 2006, pet. denied). The evidence in the record may preponderate against the agency's decision but still provide a reasonable basis for the agency's decision and thereby meet the substantial evidence standard. Texas Gen. Land Office v. Crystal Clear Water Supply Corp., 449 S.W.3d 130, 135 (Tex. App.-Austin 2014, pet. denied) (citing Texas Health Facilities Comm'n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 452 (Tex. 1984)). "The question of whether an agency's decision is supported by substantial evidence is a question of law, and we owe no deference to the district court's decision." Id. (citing Brinkmeyer, 662 S.W.2d at 956).

         Appellants' issues also concern statutory construction. We review matters of statutory construction de novo. See Texas Mun. Power Agency v. Public Util. Comm'n, 253 S.W.3d 184, 192 (Tex. 2007). Our primary concern in construing a statute is the express statutory language. See Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009). "We thus construe the text according to its plain and common meaning unless a contrary intention is apparent from the context or unless such a construction leads to absurd results." Presidio Indep. Sch. Dist. v. Scott, 309 S.W.3d 927, 930 (Tex. 2010) (citing City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008)). We consider the entire act, not isolated portions. 20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008); see Texas Citizens, 336 S.W.3d at 628 (explaining that courts "generally avoid construing individual provisions of statute in isolation from the statute as a whole"). Further, we "generally uphold an agency's interpretation of a statute it is charged by the Legislature with enforcing, 'so long as the construction is reasonable and does not contradict the plain language of the statute.'" Texas Citizens, 336 S.W.3d at 625 (quoting First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 632 (Tex. 2008)).

         No-harm Letter

         Appellants' first two issues concern the Railroad Commission's 2011 order rescinding its 2005 no-harm letter. In their first issue, the County and City argue that the TCEQ's order should be reversed under the APA or declared void under the UDJA because it was issued in the absence of a "valid and subsisting" no-harm letter from the Railroad Commission. According to the County and City, the requirement of a valid no-harm letter is mandatory and jurisdictional, and the Railroad Commission's "conclusions on the potential effect of an injection well on oil and gas resources should be determinative." See City of DeSoto v. White, 288 S.W.3d 389, 395-97 (Tex. 2009) (outlining relevant factors for determining whether statutory requirement is jurisdictional); see also TJFA, L.P. v. Texas Comm'n on Envtl. Quality, 368 S.W.3d 727, 731-32 (Tex. App.-Austin 2012, pet. denied) (discussing and applying DeSoto factors). The County and City focus on the administrative issuance of the no-harm letter "that took less than one day" and without an adjudicatory hearing as compared with the Railroad Commission's decision to rescind the letter "following a full adjudicative hearing in which Denbury and TexCom participated." The Individual Appellants similarly argue in their first issue that the TCEQ lacked authority to grant TexCom's application in the absence of a valid no-harm letter, arguing that the Legislature gave the Railroad Commission "an absolute veto power over the issuance of an injection well permit."[13]

         Appellants, however, do not dispute that TexCom timely provided the no-harm letter from the Railroad Commission in 2005 as part of its application prior to the hearings in 2007 and 2010, and that the prior lessees-operators of the mineral interests in the AOR did not seek party status to protest TexCom's application. In the no-harm letter, which was admitted during the 2007 hearing without objection, the assistant director for the Railroad Commission stated that Railroad Commission staff had reviewed the portion of TexCom's application "relating to possible injury or endangerment of any known oil and gas reservoir" and, based on staff review, "concluded" that the operation for the proposed injection wells "into the Cockfield Formation (subsurface interval 5, 134 to 6, 390) will not injure or endanger any known oil or gas reservoir." The assistant director also described the staff's review in the preceding paragraph to the Railroad Commission's conclusion as follows:

Specifically, our review entailed a study of the aspects of the application relating to the injection operation, geology of the area, and location and well records of the artificial penetrations within the area of review (.25 mile). We also used the Railroad Commission's computerized mapping system to verify that all artificial penetrations within the area of review have been identified in the application.

         Applying the statute's plain language in the context of this appeal, we conclude that TexCom complied with the express requirements of section 27.015(a) of the Injection Well Act by submitting a no-harm letter from the Railroad Commission as part of its application in 2005, and, therefore, that section 27.015(b) of the Injection Well Act did not prohibit the hearings on the merits from proceeding in 2007 and 2010. See Tex. Water Code § 27.015(a) (requiring submission of no-harm letter with application), (b) (prohibiting TCEQ from proceeding to hearing on merits until no-harm letter from Railroad Commission had been provided); see Scott, 309 S.W.3d at 930.

         In contrast, appellants' proposed interpretation of section 27.015 goes beyond the express statutory language. See Iliff v. Iliff, 339 S.W.3d 74, 80-81 (Tex. 2011) (explaining that courts "have no right to engraft upon the statute any conditions or provisions not placed there by the legislature" (quoting Duncan, Wyatt & Co. v. Taylor, 63 Tex. 645, 649 (1885))). The Railroad Commission's order rescinding its 2005 no-harm letter was not final until April 18, 2011-when the Railroad Commission denied TexCom's subsequent motion for rehearing-which was after the hearings before the ALJs in this case were completed, the administrative record closed, the open meeting at which the TCEQ Commissioners voted to grant TexCom's permit application had occurred, and the TCEQ's order granting the permits had been issued. Under appellants' proposed interpretation of section 27.015, the Railroad Commission's rescission of a no-harm letter at any time-even years after the completion of an administrative proceeding before the TCEQ-would void the corresponding TCEQ order granting an application for injection well permits. Directed by the plain language of the statute, we decline to expand the language of section 27.015 as appellants advocate. See id.; see also, e.g., Jones v. State Bd. of Educator Certification, 315 S.W.3d 237, 243 (Tex. App.-Austin 2010, pet denied) (noting "importance of construing the APA to allow parties to rely on finality of agency decisions").

         We also observe that appellants' interpretation of section 27.015 is incompatible with the plain language of section 27.051(a) of the Injection Well Act that expressly authorizes and requires the TCEQ to make the determination of whether "existing rights, including, but not limited to, mineral rights, will be impaired" as part of its decision to grant a permit application. See Tex. Water Code § 27.051(a)(2) (requiring TCEQ to find that "no existing rights, including, but not limited to, mineral rights, will be impaired"); Texas Citizens, 336 S.W.3d at 625 (viewing provision in context of statute as whole); see, e.g., Tex. Water Code §§ 27.033 (requiring permit applicant to Railroad Commission to submit "letter of determination from the railroad commission stating that drilling and using the disposal well and injecting oil and gas waste into the subsurface stratum will not endanger the freshwater strata in that area and that the formation or stratum to be used for the disposal is not freshwater sand"), .051(b)(3) (requiring Railroad Commission in its determination whether to grant permit application to find "that, with proper safeguards, both ground and surface fresh water can be adequately protected from pollution").

         And appellants' interpretation cannot be squared with the plain language of section 27.015(c) that expressly limits the TCEQ in its findings when the Railroad Commission has issued a no-harm letter. See Tex. Water Code § 27.015(c). Viewing sections 27.051 and 27.015(c) together, we conclude that they support the TCEQ's interpretation of these statutes in the factual context of this appeal-where TexCom filed the no-harm letter from the Railroad Commission, the no-harm letter was admitted as evidence without objection during the hearings on the merits, and the Railroad Commission did not rescind the letter until after the hearings had already concluded and the administrative record closed. See Texas Citizens, 336 S.W.3d at 625 (explaining that courts generally uphold agency's interpretation of statute it is charged with enforcing so long as construction is reasonable and does not contradict statute's plain language). On these bases, we overrule appellants' first issues.

         In their respective second issues, appellants argue that, even if the statutory requirements concerning the no-harm letter did not preclude the TCEQ from issuing the permits, the TCEQ acted arbitrarily and capriciously and abused its discretion by refusing to consider the "critical" evidence that the Railroad Commission had decided to rescind its 2005 no-harm letter. In particular, the Individual Appellants argue that, "even if TCEQ were permitted to issue TexCom's permits notwithstanding the revocation of the no-harm letter, its process was arbitrary and capricious given the great weight that TCEQ placed on the no-harm letter before it was revoked combined with its conscious decision to ignore that revocation." "[A]t a minimum," according to the Individual Appellants, the revocation of the no-harm letter "should have triggered an obligation to conduct further fact-finding on harm to minerals." The Individual Appellants contend that the TCEQ was required to reopen the record to consider the Railroad Commission's decision to rescind the no-harm letter and, therefore, that it acted arbitrarily and capriciously when it failed to do so.

         On this record, however, we cannot conclude that the TCEQ acted arbitrarily and capriciously or abused its discretion concerning the no-harm letter. As noted above, (i) the Railroad Commission's order rescinding the 2005 no-harm letter was not final until April 18, 2011, but the initial contested-case hearing in this case was in 2007; (ii) the lessee-operator of the mineral interests from TexCom's submission of its application in 2005 until Denbury's intervention in 2010 did not seek party status to challenge TexCom's proposed facility; (iii) the no-harm letter was admitted during the 2007 hearing without objection and, thus, was properly considered as evidence before the ALJs; (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) the TCEQ voted to approve TexCom's permit application in January 2011. See Tex. Gov't Code § 2003.047(m) (allowing TCEQ to amend PFD, including findings of fact, but "any such amendment thereto and order shall be based solely on the record made before the administrative law judge"). The evidence at the remand hearing also showed that Denbury was only in the "planning stages" for its proposed CO2 EOR activities-according to the testimony of its own witness, "approximately four years" away-and its plans were contingent and uncertain. Before operations could begin, Denbury had to obtain permits to construct and operate necessary wells, and it had to complete its planning, including determining the location of required wells for undertaking CO2 EOR activities in the Conroe Oil Field.

         We also observe that, in addition to the Railroad Commission's no-harm letter, evidence presented during the 2007 hearing supported the TCEQ's finding that "no existing . . . mineral rights[] [would] be impaired." See Tex. Water Code § 27.051(a)(2). For example, the parties presented evidence concerning the suitability of the site geologically, including the potential impact on oil and gas production. TexCom presented evidence that its waste plume would remain in the injection interval, the Lower Cockfield Formation, and that oil and gas production historically was from the Upper Cockfield Formation.[14] The ALJs' findings of fact on the suitability of the site geologically included Finding of Fact 179: "The proposed injection wells would not impair any existing mineral rights given the geological structure of the site." The TCEQ adopted this finding in its order.

         In contrast, the Railroad Commission Examiners' report and PFD, which was issued in November 2010, discussed the decision as to whether to rescind the no-harm letter in the context of Denbury's future plans at that time and included among the relevant considerations increased operating costs if TexCom were allowed to proceed with its proposed facility. As stated by the Railroad Commission Examiners in their report and PFD:

If TexCom is allowed to dispose of waste into the Lower Cockfield, Denbury's operating costs will increase due to a need to lift additional fluids as pressure increases in the Upper Cockfield. Additionally, because a CO2 flood is planned for the field, if the waste injected by TexCom is transmitted to the Upper Cockfield, these wastes are likely to be incompatible with formation fluids and production equipment, again resulting in increased costs.

         Crediting these statements, the TCEQ reasonably could have determined that, although Denbury's operating costs would increase, TexCom's proposed injection wells would not prevent Denbury from proceeding with its planned CO2 EOR operations in the Conroe Oil Field.

         On this record, even if we assume that appellants properly moved to reopen the record for additional evidence, we cannot conclude that the TCEQ acted arbitrarily and capriciously or abused its discretion concerning the Railroad Commission's decision in 2011 to rescind the 2005 no-harm letter. See Tex. Gov't Code § 2003.047(m) ("The commission may also refer the matter back to the administrative law judge . . . to take additional evidence . . . ." (emphasis added)); see also id. § 311.016(1) ("'May' creates discretionary authority or grants permission or a power."). The TCEQ reasonably could have weighed the relevant factors and found that the timing of appellants' requests to reopen the record would have caused "undue delay" and that denying those requests would not result in "an injustice." See Pretzer v. Motor Vehicle Bd., 125 S.W.3d 32, 41 (Tex. App.-Austin 2003), aff'd in part, rev'd in part on other grounds, 138 S.W.3d 908 (Tex. 2004) (listing factors for agency to consider in determining whether to grant motion to reopen evidence including "whether the evidence in support of the motion to reopen is 'material, relevant, and decisive,' whether reception of such evidence will cause any undue delay, and whether refusal to reopen will do an injustice"). We overrule appellants' second issues.

         TCEQ's Changes to Findings of Fact

         In their respective third issues, appellants argue that the TCEQ improperly rewrote many of the ALJs' adjudicative and underlying findings of fact in violation of section 2001.058(e) of the APA, see Tex. Gov't Code § 2001.058(e), and the County and City also argue that the TCEQ made changes that were not based solely on the record that was before the ALJs in violation of section 2003.047(m) of the APA, see id. § 2003.047(m). Appellants argue that the TCEQ violated section 2001.058(e) by its changes to the ALJs' findings regarding: (1) the geologic nature of the layers between the Lower, Middle, and Upper Cockfield Formations; (2) whether those layers will prevent the upward migration of fluids; (3) the effect of oil and gas production on the subsurface migration of fluids; and (4) whether TexCom's waste could be pumped to the surface.[15]

         Section 2001.058(e) of the APA generally applies to state agencies and provides that:

A state agency may change a finding of fact or conclusion of law made by the administrative law judge, or may vacate or modify an order issued by the administrative judge, only 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 ...

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