Court of Appeals of Texas, Third District, Austin
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
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
THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-11-001898, HONORABLE TIM SULAK, JUDGE PRESIDING
Chief Justice Rose, Justices Goodwin and Kelly.
Melissa Goodwin, Justice.
Court's motion, we withdraw our opinions and judgment
issued on May 22, 2019, and substitute the following opinion
and judgment in their place.
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. 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.
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). 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.
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).
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).
TexCom Gulf Disposal, LLC submitted its application to the
TCEQ in August 2005. See id. § 27.011; see
also 30 Tex. Admin. Code § 39.651 (Tex. Comm'n
on Environmental Quality, Application for Injection Well
Permit). 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.
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. 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). 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). The underground sources of drinking water
(USDWs) in the AOR lie above the Jackson Shale.
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. 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
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.
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
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;(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.
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
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.
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. TexCom filed
a subsequent motion for rehearing, which the Railroad
Commission denied on April 18, 2011.
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.
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.
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
(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).
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.).
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).
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)).
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."
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.
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.
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
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
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.
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
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
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. 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
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.
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.
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
Changes to Findings of Fact
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
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 ...