TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-13-00851-CV

Harvey Lee Kunze, Appellant

v.

Texas Commission on Environmental Quality and City of La Coste, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT

NO. D-1-GN-10-002018, HONORABLE RHONDA HURLEY, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

The City of La Coste filed an application with the Texas Commission on

Environmental Quality seeking to renew its Texas Pollutant Discharge Elimination System Permit

(a “wastewater permit” or “wastewater discharge permit”). Several months later, the Commission’s

executive director renewed the permit. Thirty days later, appellant HarveyLee Kunze filed a petition

for judicial review of the renewal decision. The Commission and the City filed separate pleas to 1

the jurisdiction, both asserting (1) that Kunze was not owed personal notification of the renewal

application proceeding, and (2) that Kunze had not exhausted any administrative remedies and thus

was barred from seeking judicial review. The trial court held a hearing and signed an order granting

the pleas and dismissing Kunze’s suit for judicial review. We affirm the trial court’s order.

Kunze’s suit for judicial review was filed against the Commission, and the City intervened

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in early December 2010.
Permitting Framework

The Commission has the statutory authority to issue wastewater discharge permits.

See generallyTex.WaterCode §§ 5.101-.135 (Commission’s general powers and duties), 5.551-.558

(permitting procedures), 26.011-.053 (general powers and duties related to water quality control).2

The Commission has delegated to the executive director the authority to act on an application to

renew a wastewater permit when: public notice requirements have been satisfied, the executive

director has considered and responded to public comments, the application meets statutory and

administrative requirements, the application does not require interpretation of Commission policy,

the executive director’s staff does not raise objections, and the application is considered uncontested.

30 Tex. Admin. Code § 50.133(a) (Executive Director Action on Application or WQMP Update).

When an application is filed, the Commission is to give notice of the application “to

any person who may be affected by the granting of the permit or license.” Tex. Water Code 3

§§ 5.115(b), 26.028(a) (notice of application for permit that will affect water quality “shall be given

to the persons who in the judgment of the [C]ommission may be affected by the application”). The

rules related to public notice provide that the Commission shall mail notice to “landowners named

Statute and rule citations are to those in effect in 2009, when the City filed its application. 2

All citations to the Texas Administrative Code are to Title 30, “Environmental Quality,” Part I,

“Texas Commission on Environmental Quality.”

An “affected person” is someone with a “personal justiciable interest related to a legal 3

right, duty, privilege, power, or economic interest affected by the application,” and an interest

“common to members of the general public” does not suffice. 30 Tex. Admin. Code § 55.103

(Definitions). In determining whether someone is an affected person, the Commission should

consider whether the claimed interest is protected by law, whether there are limitations imposed on

the interest, whether there is a reasonable relationship between the interest and the activity in

question, and what likely impact the activity will have on the person’s health, safety, use of his

property and natural resources. Id. § 55.203(c) (Determination of Affected Person).

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on the

application map or supplemental map, or the sheet attached to the application map or supplemental

map”; “persons on a relevant mailing list kept under § 39.407 of this title”; the mayor and health

authorities of the city where the facility will be located or waste will be disposed of; and various

agencies and officials. 30 Tex. Admin. Code § 39.413 (Mailed Notice); see id. § 39.407 (Mailing

Lists) (Commission shall maintain mailing list of persons requesting notice of application;

“[p]ersons, including participants in past agency permit proceedings,” may request in writing to be

included on list). However, notice of an application to renew a wastewater discharge permit is not

required to be mailed to adjacent and downstream landowners. Id. § 39.551(b)(2)(A), (c)(5)(A)

(Application for Wastewater Discharge Permit, Including Application for the Disposal of Sewage

Sludge or Water Treatment Sludge). In addition to the required mailed notice, the applicant must

also at various stages of the proceeding publish notice of its application in the local newspaper.

See id. §§ 39.405(f)(General Notice Provisions), .411 (Text of Published Notice), .413, .418 (Notice

of Receipt of Application and Intent to Obtain Permit), .419 (Notice of Application and Preliminary

Decision), .551 (notice of wastewater permit applications).

Once an application is determinated by the executive director to be administratively

complete and notice has been given, time is provided for public comment. See Tex. Water Code

§ 5.552; 30 Tex. Admin. Code § 39.418; see also 30 Tex. Admin. Code § 39.411 (notice must

describe public comment procedures). The executive director then conducts a technical review

and issues a preliminary decision. Tex. Water Code § 5.553(a). Notice of that decision is again

provided, and the public has the opportunity to comment or seek a contested case hearing. Id.

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§ 5.553(b); 30 Tex. Admin. Code §§ 39.419 (notice of technical review and preliminary decision),

39.551(c)(3) (notice of preliminary decision generally gives at least thirty days for public comment),

55.152(a) (Public Comment Period) (public comment period generally ends thirty days after

publication of preliminary decision); see also Tex. Water Code §§ 5.554 (executive director may

hold public meetings during comment period), 5.555 (executive director shall respond to timely,

relevant, and material public comments), 26.028(c)(Commission generallyshall hold public hearing

on wastewater permit application), (d) (circumstances under which Commission may approve

renewal application without public hearing).

An individual may file a motion to overturn the executive director’s decision on a

permit application within twenty-three days of the date the Commission mails notice of the action.

30 Tex. Admin. Code § 50.139 (Motion to Overturn Executive Director). An “affected person”may

also file a request for reconsideration or a contested case hearing. Id. § 55.201 (Requests for

Reconsideration or Contested Case Hearing). A party who files a timely motion to overturn that is

overruled by operation of law need not file a motion for rehearing in orderto appeal. Id. § 50.139(g).

A person affected by a Commission decision may seek judicial review in the trial court. Tex. Water

Code § 5.351.

In making a permit decision, the Commission and the executive director must

take into account an applicant’s compliance history. 30 Tex. Admin. Code §§ 60.1(a)(1)(A) 4

The components of a compliance historyare: (1) final enforcement orders, court judgments,

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and criminal convictions related to compliance with state or federal environmental rules or laws;

(2) orders developed under section 7.070 of the water code (governing agreed administrative orders

settling alleged environmental violation); (3) chronic excessive emissions events; (4) information

required by law or other requirement necessary to maintain federal authorization; (5) dates of

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(Compliance History), .3 (Use of Compliance History). The relevant time period is the five years

before the date the application is received and may be extended “up through completion of

review of the application.” Id. § 60.1(b). After a review of the compliance history, the executive

director classifies the applicant as a high, satisfactory, or unsatisfactory performer. Id. § 60.2(a)

(Classification). A classification may only be appealed if the person or site is classified as an

unsatisfactory performer or a repeat violator or obtains a satisfactory classification “with 45 points

or more,” and the appeal must be filed “with the executive director no later than 45 days after notice

of the classification is posted on the [C]ommission’s website.” Id. § 60.3(e).

Procedural and Factual Summary

On September 23, 2009, the City filed an application to renew its wastewater

discharge permit. The application was declared administratively complete on October 1, and notice

was published in the local newspaper two weeks later. On February 2, 2010, technical review was

completed, and the executive director made a preliminary decision to approve the renewal; notice

of that decision was published in the local paper in March 2010. On May 17, the executive director

renewed the permit. On June 16, Kunze filed his petition for judicial review.

investigations; (6) written notices of violation for up to one year “from the date of issuance of each

notice of violation,” except for those determined to be without merit; (7) dates of letters providing

notice of an intended audit; (8) environmental management systems used for environmental

compliance; (9) voluntaryon-site compliance assessments; (10) participation in a voluntarypollution

reduction program; and (11) “a description of early compliance with or offer of a product that meets

future state or federal government environmental requirements.” Id. § 60.1(c)(ComplianceHistory).

The executive director must determine whether each documented violation is major, minor, or

moderate. Id. § 60.2(d) (Classification). A person or site is a “repeat violator” if, “on multiple,

separate occasions, major violations of the same nature and the same environmental media” occur

in the preceding five-year compliance history. Id. § 60.2(f).

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In its plea to the jurisdiction, the Commission presented a summary of the City’s

compliance history, which ran from September 1, 2004, through October 26, 2009. See id. § 60.1(b).

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The Commission stated that after reviewing the City’s compliance history, a committee determined

the City was an “average performer.” See id. §§ 60.1(c) (factors considered in compliance history 6

review), .2(a) (classifications); see also Tex. Water Code § 5.754(b) (average performer is one that

“generally compl[ies] with environmental regulations”). Based on that classification and what it

characterized as the City’s generally quick response to violations, the Commission explained, the

executive director made a preliminary decision to approve the renewal. The Commission asserted

in its plea that notice of the application’s submission and the executive director’s preliminary

decision was published in the local newspapers and provided to the relevant parties, including

individuals who had asked to be on a mailing list. When no one sought a hearing or lodged a

complaint or comment, the permit was considered uncontested and was renewed. No one filed a

Kunze asserts that the Commission should have considered August 2009 violations. The 5

Commission acknowledged that it was understandable that Kunze wanted those violations to be

considered but explained that those violations did not result in an agreed order until June 2010,

outside the relevant compliance history time period, and were therefore not considered. See id.

§ 60.1(b) (compliance period is five years before date application is received and may be extended

through completion of review), (c)(elements considered in review are, inter alia, “final enforcement

orders, court judgments, consent decrees,” dates of investigations, and written notices of violations).

 In that time period, the Commission conducted sixty-one investigations, resulting in one 6

agreed order and six written notices of violations. The agreed order was entered into by the City and

the Commission in April 2008 and was related to two major violations in September 2004—failing

to comply with the effluent limit for ammonia nitrogen and failing to obtain Commission approval

to discharge industrial waste into public waters—and one moderate violation inMarch 2004—failing

to comply with effluent limits on dissolved oxygen. The notices of violations were related to three

minor violations occurring in March 2006 and June 2009 and threemoderate violations in December

2005,November 2006, and March 2007; the minor violations were resolved bythe City’s submission

of certain documentation, and the moderate violations were all self-reported.

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motion to overturn or reconsider the renewal, nor was there a request made for a contested

case hearing.

The Commission and the City argued that Kunze’s suit should be dismissed because

he had not exhausted his administrative remedies, asserting that: the Commission and the City had

complied with the applicable statues and rules; individual, mailed notice was not required to be sent

to adjacent and downstream landowners; Kunze had never asked to be placed on the mailing list for

information related to the City’s facility; notice of the application was published in the newspaper

as provided by law and rule; and Kunze did not request a contested case hearing or file a motion to

overturn the renewal decision. The trial court held a hearing and concluded that the pleas were

meritorious, signing an order granting the pleas and dismissing Kunze’s suit.

Kunze argues that he was not required to give the Commission the opportunity to

reconsider the executive director’s renewal of the City’s permit because section 5.351 of the water

code required him to seek judicial review within thirty days of the executive director’s decision. He

asserts that the exhaustion-of-remedies doctrine did not require him to file a motion for rehearing

because the Commission would not have had the opportunity to rule on the motion before losing

jurisdiction to the reviewing court. He also contends that he was not required to request a contested

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case hearing because the relevant statutes and rules do not provide a right to such a hearing and 7

because he was not provided the legal notice he claims he was due.

Standard of Review

A plea to the jurisdiction is a dilatory plea asserting that a trial court lacks subjectmatter jurisdiction. See Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.

2004). Whether a court has subject-matter jurisdiction is a question of law that we review de novo.

Id. at 226. Although we construe pleadings and their factual allegations liberally in favor of

jurisdiction, when a plea to the jurisdiction “challenges the existence of jurisdictional facts, we

consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional

issues raised, as the trial court is required to do.” Id. at 226-27.

Notice

We first turn to whether Kunze received proper notice of the permitting proceeding.

When an application for a permit or license is declared administratively complete, the Commission

The water code allows the Commission to act on a renewal application without holding 7

a public hearing if the applicant is not seeking to significantly increase the quantity of waste

or materially change the pattern or place of discharge, if the activities will maintain or improve the

quality of waste, notice and the opportunity to be heard is provided, and the Commission determines

that the applicant’s compliance history does not raise concerns about the applicant’s ability to

comply with permit terms. Tex. Water Code § 26.028(d); see also id. § 26.028(h) (Commission

may act without holding public hearing if notice of application has been published in paper, all

persons “who in the judgment of the [C]ommission maybe affected” are provided mailed notice, and

no affected person has requested public hearing). Likewise, the rules provide that the Commission

may act on a renewal application under water code section 26.028(d) without a contested case

hearing if a review of the applicant’s compliance history does not raise issues with the applicant’s

ability to complywith permit terms. 30 Tex. Admin. Code § 50.113(d)(4) (Applicability and Action

on Application).

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is to give notice of the application “to any person who may be affected by the granting of the permit

or license.” Tex. Water Code §§ 5.115(b), 26.028(a) (notice of wastewater application “shall be

given to the persons who in the judgment of the commission may be affected by the application”).

Although notice of a permit application generally must be mailed to landowners

named in the application, 30 Tex. Admin. Code § 39.413, when the applicant seeks only to renew

its wastewater discharge permit, notice of that application to renew is not required to be mailed to

adjacent and downstream landowners, id. § 39.551(b)(2)(A), (c)(5)(A). The applicant must publish

notice in the local paperthroughout the permitting process. See id. §§ 39.405(f)(general provisions),

.411 (text of published notice), .413 (who should receive mailed notice), .418 (notice of filing of

application), .419 (notice of technical review and preliminary decision), .551 (notice of wastewater

discharge permit applications).

Notice related to the City’s renewal application was published in the newspaper

when the application was declared administratively complete, when technical review was complete

and preliminary approval was given, and when the permit was issued. Kunze asserts that he should

have been mailed individual notice and that he should be considered an “affected person.” However,

despite filing multiple complaints related to the City’s facility, Kunze did not ask to be included on

the relevant mailing lists. Nor does Kunze explain how notice was insufficient under the applicable

rules and statutes or, importantly, explain why rule 39.551, relieving the Commission from the

duty to mail him notice, should not apply.

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Kunze asserts that his petition alleged jurisdictional facts showing that he received 8

insufficient notice and that the trial court should have taken as true his factual assertions that he did

not receive adequate notice. To the contrary, however, Kunze’s pleadings asserted legal conclusions

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The evidence produced by the City and the Commission shows that they provided

notice in accordance with the Commission’s rules. We hold (1) that Kunze has not demonstrated

that he was entitled to more notice than was provided and (2) that the City and Commission

complied with the applicable statutes and rules in providing notice of the application.

Exhaustion of Administrative Remedies

As explained earlier, the executive director may act on an uncontested application,

id. § 50.133(a), and a permit is effective when signed by the executive director unless otherwise

specified, id. § 50.135 (Effective Date of Executive Director Action). A person dissatisfied with

the executive director’s decision may file a motion to overturn, asking the Commission to

reconsider the decision. Id. § 50.139 (“motion to overturn” used interchangeably with “motion for

reconsideration”). A motion to overturn must be filed within twenty-three days of the date notice

of the decision is mailed to the applicant and “persons on any required mailing list for the action.”

Id. § 50.139(b). If a motion to overturn is timely filed and not acted on by the Commission, it is

overruled by operation of law forty-five days after notice of the permit was mailed; in such a case,

a motion for rehearing is not a prerequisite for appeal, and “[i]f applicable, the [C]ommission 9

related to notice (in his petition, he stated “that he was not provided the notice he was due” and that

requesting a hearing in the administrative process would not have been “realistically adequate to

address Mr. Kunze’s claims that he should have been provided notice”). See Creedmoor-Maha

Water Supply Corp. v. Texas Comm’n on Envtl. Quality, 307 S.W.3d 505, 516 (Tex. App.—Austin

2010, no pet.). The facts in this case related to notice are undisputed, and the trial court was

therefore empowered to make the jurisdictional determination as a matter of law. See University of

Tex. v. Poindexter, 306 S.W.3d 798, 806 (Tex. App.—Austin 2009, no pet.).

A person who was provided notice under chapter 39 but did not timely file a public 9

comment, request a hearing, or participate in any public meeting or contested case hearing may file

a motion for rehearing under rule 50.119 or rule 80.272 or a motion to overturn the executive

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decision may be subject to judicial review” under section 5.351 of the water code. Id. § 50.139(f),

(g); see Tex. Water Code § 5.351. An affected person may also file a request for reconsideration or

for a contested case hearing within thirty days of the date the executive director’s decision is mailed.

30 Tex. Admin. Code. § 55.201(a), (b). However, there is no right to a contested case hearing for

an application for renewal of a wastewater discharge permit if: (1) the applicant is not seeking a

significant increase in the amount of discharge or material changes to the pattern or place of

discharge; (2) the permitted activitywill maintain or improve the waste quality; (3) consultation and

response to all timely and significant public comments was given; and (4) a review of the applicant’s

five-year compliance history does not raise issues with the applicant’s ability to comply with permit

terms. Id. § 55.201(i)(5).

The City and the Commission assert that because Kunze did not involve himself in

the administrative proceeding, he did not exhaust his administrative remedies and thus is barred from

seeking judicial review. Kunze, on the other hand, argues that he was only required to file a petition

for judicial review within thirty days of the date the executive director issued the permit, citing for

support Walter West, P.E. v. Texas Commission on Environmental Quality, 260 S.W.3d 256 (Tex.

App.—Austin 2008, pet. denied). See Tex. Water Code § 5.351 (person “affected by” Commission

decision may seek judicial review within thirty days of effective date). He asserts that the

Commission would not have been able to act on a motion to overturn, for reconsideration, or for a

director’s decision under rule 50.139, but only to the extent of complaining about changes from the

draft permit to the final decision. 30 Tex. Admin. Code § 55.201(h) (Requests for Reconsideration

or Contested Case Hearing).

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contested case hearing before the thirty-day deadline of section 5.351 had run, making any

exhaustion requirement nonsensical.

Although Kunze is correct that it is unlikely that the Commission would act on a

motion to overturn, due twenty-three days after notice of the executive director’s decision is issued,

before the thirty-day deadline ran, and although a motion for reconsideration or for a contested case

hearing has the same thirty-day deadline, we cannot ignore the fact that both the water code and the

Commission’s rules provide administrative remedies for parties who object to an action taken by the

executive director. The Texas Supreme Court and this Court have repeatedlysaid that “only a party 10

that has exhausted all available administrative remedies may seek judicial review” under section

5.351. Texas Water Comm’n v. Dellana, 849 S.W.2d 808, 809-10 (Tex. 1993); see Texas Comm’n

on Envtl. Quality v. DenburyOffshore, LLC, No. 03-11-00891-CV, 2014 WL3055912, at *6-7 (Tex.

App.—Austin July 3, 2014, no pet.) (mem. op.) (if agency has exclusive jurisdiction, partymust first

pursue all administrative remedies before trial court may review agency’s decision); Friends of

Canyon Lake, Inc. v. Guadalupe-Blanco River Auth., 96 S.W.3d 519, 526-27 (Tex. App.—Austin

2002, pet. denied) (plaintiffs did not exhaust all available administrative remedies because they did

not seek contested case hearing after published notice of application); Larry Koch, Inc. v. Texas

Natural Res. Conservation Comm’n, 52 S.W.3d 833, 839 (Tex. App.—Austin 2001, pet. denied)

(“exhaustion rule requires that plaintiffs pursue all available remedies within the administrative

The Commission’s letter stating that the permit had received final approval explained that 10

a party could file a motion to overturn within twenty-three days of the letter and could also seek

judicial review under section 5.351 of the water code. The letter cautioned, “Even if you request

judicial review, you still must exhaust your administrative remedies.”

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process before seeking judicial relief”). The fact that the administrative remedies are unlikely to 11

have been finalized by the time a partymust file his petition for judicial review does not excuse him

from availing himself of those remedies. See Heat Energy Advanced Tech., Inc. v. West Dallas 12

Coal. for Envtl. Justice, 962 S.W.2d 288, 292-93 & n.1 (Tex. App.—Austin 1998, pet. denied)

(petition for judicial review filed after motion for rehearing was filed but before it was ruled on

properly invoked trial court’s jurisdiction).

See also Texas Comm’n on Envtl. Quality v. Bonser-Lain, 438 S.W.3d 887, 894-95 (Tex. 11

App.—Austin 2014, no pet.) (“section 5.351 of the Water Code must be construed in the context of

longstanding jurisdictional limitations on judicial review of agency orders,” and its “waiver of

immunity is limited to administrative actions that are regulatory in nature and only upon the

exhaustion of all administrative remedies”); Hendricks v. Texas Comm’n on Envtl. Quality, No. 03-

10-00758-CV, 2011 WL 2437694, at *3 (Tex. App.—Austin June 15, 2011, no pet.) (mem. op.)

(deferring to Commission’s interpretation of its statutes and rules as “acknowledg[ing]” that judicial

review may be available for Commission decision that was subject of motion to overturn but “not

as stating or implying any sort of sequential relationship between the two remedies”); City of Austin

v. Texas Comm’n on Envtl. Quality, 303 S.W.3d 379, 383-84 (Tex. App.—Austin 2009, no pet.)

(“The fact that an avenue for administrative review was open did not foreclose judicial review also

being available, and the fact that administrative review was sought did not foreclose judicial review

ceasing to be available.”); City of Donna v. Victoria Palms Resort, Inc., No. 13-03-00375-CV, 2005

WL 1831593, at *3 (Tex. App.—Corpus Christi Aug. 4, 2005, pet. denied) (mem. op.) (“When the

legislature vests exclusive jurisdiction in an agency, exhaustion of administrative remedies is

required before a party may seek judicial review of an agency’s action.”).

Kunze notes that certain cases cited by the City and the Commission relate to instances 12

in which the Administrative Procedures Act applies in conjunctionwith statutoryschemes governing

a state agency, see Simmons v. Texas State Bd. of Dental Exam’rs, 925 S.W.2d 652 (Tex. 1996) (per

curiam); Heat Energy Advanced Tech., Inc. v. West Dallas Coal. for Envtl. Justice, 962 S.W.2d 288

(Tex. App.—Austin 1998, pet. denied), and asserts that those cases do not apply here. However, the

same logic that requires exhaustion of remedies in a contested case applies here. Allowing a party to

seek judicial review when he did not involve himself at the agency level, resulting in the case being

uncontested, without requiring him to exhaust available administrative remedies, while requiring

more of a party who got involved in the administrative proceeding, would encourage an objecting

party to lie behind the log and simply seek judicial review rather than encouraging participation in

the administrative process, thus defeating the purpose of the administrative process—to allow the

agencyto address objections before theyare presented to a trial court. See, e.g., Strayhorn v. Lexington

Ins. Co., 128 S.W.3d 772, 780 (Tex. App.—Austin 2004), aff’d, 209 S.W.3d 83 (Tex. 2006).

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Nor does our opinion in Walter West lead us to conclude that exhaustion of remedies

was not required. See generally 260 S.W.3d at 260-63. The complaining parties in Walter West had

attempted to intervene in the administrative proceeding and were determined by the Commission

not to be “affected parties.” Id. at 258-59. We held that the executive director’s subsequent decision

to grant the permit, which was determined to be uncontested after a hearing request was withdrawn

by the only person determined to be an affected person, was not a contested case subject to the

Administrative Procedures Act. Id. at 261-62. Instead, the proceeding was governed by the water

code, which required a suit for judicial review to be filed within thirty days of the date the permit

was approved. Id. at 263. We did not hold in Walter West that a party who was a stranger to the

permitting proceeding could seek judicial review after never having attempted any involvement in

the administrative proceeding.

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In an uncontested case such as this, the water code and applicable rules allow a person

to seek further agency review of the executive director’s decision. Because there were available

administrative remedies, Kunze was required to avail himself of them, whether by filing a motion

to overturn, for reconsideration, or for a contested case hearing. He did not do so, and therefore he

is barred from seeking judicial review of an agency proceeding he was not involved in.

To the extent that any language in footnote 7 of Walter West, P.E., v. Texas Commission 13

on Environmental Quality can be construed as implying that a party need not exhaust administrative

remedies before seeking judicial review of a decision in an uncontested permitting proceeding, such

language is mere dicta. See 260 S.W.3d 256, 262 n.7 (Tex. App.—Austin 2008, pet. denied).

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Conclusion

The Commission and the City complied with relevant statutes and rules related to

notice of this permitting proceeding. Because Kunze did not seek to employ any of the available

administrative remedies, he may not seek judicial review of the permitting decision. We affirm the

trial court’s order granting the City’s and the Commission’s pleas to the jurisdiction.

__________________________________________

David Puryear, Justice

Before Justices Puryear, Pemberton, and Field

Affirmed

Filed: August 14, 2015

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