10 Reasons Why This Case Is Squirrelly
In Port Arthur Community Action Network (PACAN) v. Texas Commission on Environmental Quality, the Texas Supreme Court clarified the statutory definition of “Best Available Control Technology”(BACT) under the Texas Clean Air Act in response to a certified question from the Fifth Circuit. The Texas Supreme Court ruled that the statutory definition under the statutory definition of BACT, a previously permitted emissions level for one facility is neither necessary nor sufficient to establish BACT for other similar facilities–that “available” means available now, not in the future, based on theoretical or speculative future emission-control technology. This case (appropriately involving a homonym to a popular nut) is squirrelly–for at least 10 reasons, ranging from the unusual procedural path this case took to the substantive analyses of the reviewing tribunals.
Background
The case arose from a challenge by a not-for-profit community environmental organization in Port Arthur, protesting the application of Port Arthur LNG, L.L.C., for a PSD permit for a liquified natural gas plant and export terminal. Following a contested case hearing, the Texas Commission on Environmental Quality (TCEQ) rejected the hearings examiner’s recommendation that permit issuance be conditioned on the application of the more stringent control technology, and granted the permit as the staff had drafted it. PCAN filed suit in the Fifth Circuit.
In its initial decision, the Fifth Circuit held that the TCEQ had acted arbitrarily and capriciously in not explaining why it, contrary to its policy, had declined to impose certain emissions limits on the Port Arthur LNG facility that it had imposed on another similar facility. The Fifth Circuit, therefore, ordered that the agency’s decision be vacated and the case remanded to the TCEQ, but later had second thoughts and withdrew its decision, certifying the question instead.
Why the decision was squirrelly
First, it was unusual for the TCEQ Commissioners to reject the recommendation of the 2 Administrative Law Judges who had heard the case. The judges had recommended that the permit be issued contingent on application of the more stringent technology.
Second, it was unusual for the Fifth Circuit after weighing in on the issue before it, to then withdraw that opinion and certify the question, realizing they had been presented with a novel question that required them to interpret a Texas statute.
Third, it was unusual for the case to have gone to the Fifth Circuit. Under the Texas Clean Air Act, an appeal of a TCEQ permit decision typically is to Travis County district court. The reason why this challenge went to federal rather than state court was found not in the Fifth Circuit’s decision, which never mentioned the issue, but rather in PACAN’s petition—that cited 15 U.S.C. § 717. That statute gives FERC the exclusive authority to approve or deny an application for siting, construction, expansion, or operation of an LNG terminal and grants exclusive jurisdiction to federal appellate courts to review challenges to those permits.
Fourth, had the case gone to Travis County district court, it would have given deference to the agency’s decision, particularly on a matter involving admittedly technical issues within the agency’s purview. In its initial decision, the Fifth Circuit recognized that the state standard of review it was applying was deferential, explaining “Under [the Texas Health & Safety Code], the only issue for a reviewing court to decide is “whether the [Commission’s] action is invalid, arbitrary, or unreasonable” and that Texas courts interpret this statute to incorporate the standard of review under Texas Administrative Procedure Act (APA). Under the Texas APA, a court is to reverse or remand the case if the agency’s findings, inferences, conclusions, or decisions are “not reasonably supported by substantial evidence” or “arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.” Applying that deferential standard, the Fifth Circuit nevertheless found the TCEQ had acted arbitrarily and capriciously.
Fifth, the Texas Supreme Court declined to answer the question the Fifth Circuit certified, that is, “Does the phrase ‘has proven to be operational’ in Texas’s definition of ‘best available control technology’ codified at Section 116.10(1) of the Texas Administrative Code require an air pollution control method to be currently operating under a permit issued by the [TCEQ], or does it refer to methods that TCEQ deems to be capable of operating in the future?” The Texas Supreme Court rejected both formulations and instead focused on the text of both the rule and the statute, rejecting the agency’s regulatory gloss on the statutory definition–that the BACT constitutes technology that “through experience and research, has proven to be operational, obtainable, and capable of reducing or eliminating emissions from the facility, and is considered technically practical and economically reasonable for the facility.” It instead required that the technology be presently operable.
Sixth, the Texas Supreme Court declared that “administrative rules are an ‘inferior source of law’ as compared to the statutes from which they derive their authority.” The explained that agency should follow the plain meaning of the promulgated text, which courts should interpret as they would a statute—while keeping in mind the rule’s inferior status relative to statutes. Parties affected by the rule, in turn, should be able to rely on both the agency and the courts to apply the plain text of the rule as it is written.” In interpreting that rule and the statute, the Court expressly rejected outside sources, including agency practice and policy.
Seventh, the Texas Supreme Court rejected not only the relevance of other sources of authority, including federal law generally, but in particular the relevance of the federal Clean Air Act, on which petitioner, in part, had relied. The Court explained: “The content and meaning of a Texas administrative rule is purely a question of Texas law over which the People of Texas—not Congress or federal executive-branch agencies—exercise ultimate control. Our job as a Texas court answering a question of Texas law is not to make the words of the Texas Administrative Code fit neatly within a multifaceted regime of so-called ‘cooperative federalism.’ Our job instead is to say what the words mean.”
Interestingly, the Fifth Circuit, in another case in 2015–involving the Texas equivalent of the federal Superfund statute–Vine Street LLC v. Borg Warner Corp., expressed confidence that the Texas Supreme Court would apply the US Supreme Court’s reasoning in interpreting the federal Superfund statute to interpret Texas law. The Texas Supreme Court in PACAN, however, presumably would disagree; as it explains: “To the extent any party argues that the outcome of the underlying federal litigation should turn on considerations of federal law—such as federal statutes, EPA regulations, or other ‘guidance’ or actions by the EPA—we make no comment on those arguments. Our certified-question jurisdiction is limited to ‘questions of state law.’”
Interestingly, the Texas Supreme Court in PACAN further noted:
We have not considered the federal-law question of whether some aspect of federal environmental law—or some amorphous federal-law notion of “cooperative federalism”—might purport to obligate state courts to interpret state law any differently than we normally would. Nor have we considered the related question of whether federal law could validly impose any such obligation on state courts, although we are aware of no constitutional principle by which any element of the federal government could interfere with the state courts’ interpretation of state law.
Eighth, the Texas Supreme Court failed to acknowledge the potential applicability of the Texas Code Construction Act. The Code Construction Act expressly allows for consideration of extratextual factors regardless of whether the statute is ambiguous on its face. Those factors include: (1) the object sought to be obtained; (2) the circumstances of the statute’s enactment; (3) the legislative purpose; (4) the common law or former statutory provisions, including laws on the same or similar subjects; and (5) the consequences of a particular construction. It applies generally to all Texas codes and is expressly referenced in the Texas Health & Safety Code.
Ninth, although the Texas Supreme Court rejected the agency rule’s gloss on the statute, upon which the Fifth Circuit had relied, it essentially upheld the agency’s determination that the facility in question had applied BACT.
And tenth, and finally, at least for this piece, last, the case was squirrelly because the Texas Supreme Court described the underlying litigation as being about the permitting of a “power plant,” and on 14 occasions referred to the facility as a power plant, although an LNG plant and export facility is clearly a horse of a different color. The parties never used the term “power plant”; it’s anyone’s guess why the Court chose to. In cases involving technical issues, perhaps a court need not defer to the agency whose decision it’s reviewing, but the fact the Texas Supreme Court did not realize the facility at issue was an LNG plant and export facility, and not a power plant, seems nutty and might give pause.
