### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-09-00005- CV

City of Waco, Appellan t

v.
Texas Com m ission on En vironm ental Quali ty, Appellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 201 ST JUDICI AL DISTRICT NO. D-1 -GV-0 8-0 0040 5, H ONO RAB LE DARLENE BY RNE, JUDGE P RESIDING

D I S S E N T I N G O P I N I O N

I n Grissom and Colli ns , the case s relied u p o n b y the majority , this Court 1

a d d r e s s e d

— a n d th e ma jo r it y n o w ig n o r e s

— th e statutory mecha

nism by which the Comm is s io n

— a n d
the State—balanc e economic develo p me n t a n d w a te r q u a li ty p r o te c ti o n u

n d e r th e Texas Water Code.

I t is undis p u t ed t h at i n 1998 the river seg ment at issue was place d on a statutory list of impaired water

way s. The majority upholds the Commi ssion’s decision to deny the City of Waco
“af fec ted person ” s t atus, despite the City ’s role in protec ting its sole water supply , L ake Waco,

conce rning the approva l of a “major” amendment—including an i n cr ea s e from 690 cows to 999

cows—to a Concentra ted Animal Fe eding Oper ation (CAFO ) permit for O-Ke e Da i ry , a dairy
located upstream from L ake Waco and on the im p ai re d ri v er seg ment. See Tex. Water Code

Colli ns v. Texas Natural Res. Co n ve r sation Comm’n , 94 S.W .3d 876, 884-85 (Tex. 1 App.—Austin 2002, no pet.); United Copper Indus., Inc. v. Grissom , 17 S.W .3d 797, 802 (Tex. App.—Austin 2000, pet. dism’d as moot).Ann. §§ 5.115(a) , 26.503 (West 2008). I n the same order , the Commi ssion denied the City ’s reque st

for a contested case hear ing, approve d the major amendment, and issued the permit. By aff irming
the Commi ssion’s order , the majority eff ectively allows the Commi ssion to sidestep the leg islative
direc tive to aff

ord an “af

fec ted person” the opportunity to be h ea rd o n d isputed, rele vant, and
materia l issues of fac t conce rning a CAFO permit. See id

. I t i s n either nece ssary nor proper to interpre t the water code to by pass a h ea ri n g o n the City ’s status as an “af fec ted person” on the
evidenc e pre sented by

the City

. The City ’s reque st for relief is a modest one: a hear ing. At a minimum , I would

reve rse the district court’s judgme nt and rema nd the issue of whether the City is an “af fec ted person”

to the Commi ssion for ref err al to the State Offic e of Administrative Hea ring s (SOAH). See 30 Tex.
Admin. Code § 55.211 (2 0 1 0 ) (Commissi on on Environmental Quality , Commi ssion Action on Requests for Rec onsideration and Contested Ca se He aring ). I there fore respe ctfully

dissent.

Statu tory and Regulat

ory Requirem ents

A) A p p l i c a b l e S t a t u t e s a n d R eg u l a t i o n s f o r De t er mi n i n g “Affected Person” Status and Right to a Cont ested Case He aring
Section 55.211 of title 30 of the adminis t ra t i v e code sets forth proce dures for
Commi ssion action on reque sts for contested case hear ings. Id

. Section 55.211 provides that
Commi ssion c onsideration on reque sts f or contested case s is “ not itself a contested case subject to
the AP A” and that the C ommissi on “will ev al u ate public comment, ex ecutive director’ s response

to comment

. . . and reque sts for contested case hear ing.” See id. § 55.211(a) , (b). Although the
Commi ssion may “dete rmine that a hear ing reque st does not meet the require ments of this

2subchapte r, and act on the application,” the C ommissi on alterna tively may ref er a hear ing reque st

to SOAH to deter

minate whether a person is an “af fec ted person” entitled to reque st a contested case :

The refe rra l may specify that SOAH s hould prepa re a rec ommendation on the s ole question of whether the reque stor is an aff ecte d person. I f the commission ref ers the hear ing r equest to SOAH it shall be proc essed a s a conte sted ca se under the APA.

Id . § 55.211(b)( 2), (4)

.

Section 55.211(c) (2) provides that a req u est for a contested case hear ing “shall be

g rante d if the re quest is . . . made by an af fec ted per son” and the reque st:

(A) raises disputed issues of fac t that wer e raised during the comment period, that
wer e not withdrawn by the commenter by filing a withdrawa l letter with the chief cler k prior to the filing of the executive direc tor’s response to comment, an d that are rele vant and materia l to the commission’s decision o n t h e application; (B ) is tim ely

filed with the chie f cle rk; (C) is pursuant to a rig ht to hearing authorized by law; and (D) complies with the require ments of § 55.201 of this title (re lating to Requests for Rec onsideration or Contested Case Hea ring ).

Id . § 55.211(c) (2).

Under section 5.115(a) of the water code, the leg islature define s an “af fec ted person”
and direc ts the Commi ssion to adopt rules specify ing fac t o rs t h at “must be considere d” in
deter mining whe ther a

person is an “ aff

ecte d person” :

For the purpose of an administrative hear ing held by or for the commission involving
a contested case , “af

fec ted person,” or “per son aff ecte d,” or “per son who may be

3aff ected” means a person who has a persona l justiciable interest rela ted to a leg al rig ht, duty , privileg e, power , or economic interest aff ected b y t h e administrative hear ing. A n interest common to member s of the g ener al public does not qualify as a persona l justiciable interest. The commission shall adopt rules specify ing fac tors which must be consider ed in deter mining whe ther a person is a n aff ecte d person in any contested case arising u n d er t h e air, waste, or water prog rams within the commission’s jurisdiction and whether an aff ecte d association is entitled to standing in contested c ase he aring s.

Tex. W ater

Code Ann. § 5.115(a ).

I n response to the leg islative direc tive, section 55.203 of title 30 of the administrative

co d e restate s the leg islature’s definition of “af fec ted person” and then sets forth fac tors that t h e
Commi ssion “shall” consider when de termining “af

fec ted per son” status:

(a) For any application, an aff ecte d person is one who has a persona l justiciable interest related to a lega l rig ht, duty , privileg e, power, o r economic interest aff ecte d by the application. An interest common to me mbers of the g ener al public does not qualify

as a pe rsonal justiciable intere st. (b) Gover

nmental entities , in c lu d in g lo c a l g o v e r n me n ts a n d public ag encie s, with authority under state law over issues raised by the application may be considere d aff

ecte d persons. (c) I n deter

mining whether a p er s o n is an aff ecte d person, all fac tors shall be considere d, including, but not limited to, the following: (1) whether the interest claimed is one protec ted by the law under which the applica tion will be considered; (2) distance restric t i o n s or other limit ations imposed by law on the aff ecte d interest; (3) whether a rea sonable rela tionship exis ts betwee n the interest claimed and the a ctivity

reg ulated; (4) likely impact of the reg ulated activity on the health and safe ty of the person, a nd on the use of pr operty

of the pe rson;

4(5) likely impact of the reg ulated activity on use of the impacted natura l
resour ce by

the per son; and (6) for g overnme ntal entities, their statutory authority over or interest in the issues rele vant to the applica tion.

30 Tex. Admin. Code § 55.203 (West 2010) (Commissi on on Environme n ta l Quality , Deter mination
of Aff ecte d Person).

B) Statutes and Regulations Applicable to the North Bosque River W atershed Dairy CAFOs in the North Bosque River water shed have been a source of contention 2
and conce rn for at least the past deca de. S ee C i t y o f W aco v. Texas Natural Res. Conservation
Comm’n , 83 S.W .3d 169, 172-75 (Tex. App.—Austin 2002, pet. d en i ed ) (desc ribing history and
l egis lation enac ted addre ssing dairy CAFOs located in the North Bosque River water shed ). T h e
dairies also have been the subject of extensive scientific studies, including their impact on the water quality of the water shed and L ake Waco, and the fo cu s o f leg islation and reg ulation enac ted to
addre ss the dairies’ impact on the envir onment, including w ater quality

. The North Bosque River has been deeme d an “impaire d” river. Acc ording to the
Commi ssion, the North Bosque River, including seg ment 1226, “wa s included in the 1998 Texas
CW A § 303(d) [33 U.S.C. § 1313(d) (2001)] L ist and deeme d impaired under narr ative water quality
standards rela ted to nutrients and aquatic plant g rowth.” I n 2001, citing “re cent studies” that “have
indicated that under most conditions phosphorus is the limit ing nutrient in the North Bosque River

The Br azos River’s flow is aug mented by sever al major tributaries including the “B osque 2 River at Waco.” Ver

ne Huser, Rivers o

f T ex a s 75 (2000). The Br azos River ranks third in siz e among Texas state rivers and “ra tes as having the larg est water shed of any hear tland river.” Id

. at 72.
5basin

. . . and that dairy waste application fields and municipal wastew ater trea tment plants are the

major controllable source s of phosphorus,” the Commi ssion develope d two Total Maxi mum Daily

L oads (TMDL s) for phosphorus in the North Bosque River water shed. One of the g oals of the 3

TMDL s was to ac hieve a

50% re duction in the annual avera g e loading of soluble phosphorus.
Also in 2001, the leg islature amen d ed chapte r 26 of the water code by adding subchapte r L , t i tled “Protec tion of Certain Watersheds,” to addre ss dairy CAFOs in cer tain

water sheds. See ge nerally Tex. Water C ode Ann. §§ 26.501-.504 (W est 2008) (“subchapte r L ”). Chapter 26, titled “Water Quality Control,” states the policy of the State to maintain water quality :

I t is the policy of this state and the purpose of this subchapte r to maintain the quality of water in the state consistent with the public health and enjoy ment, the propag ation and protec tion of terre strial and aquatic life, and the opera tion of exis ting industries, taking into consideration the economic development of the s tate; t o encour ag e and promo t e the development and use of reg ional and are awide waste collection, trea tment, and disposal sy stems to serve the w aste disposal nee ds of the citiz ens of the state; and to r equire the use of all rea sonable methods to implement this policy

.

Id

. § 26.003 (West 2008). And chapte r 26 desig nates the Commi s s i o n as t he primary ag ency responsible for

administering chapte r 26, including establishing w ater quality levels:

Ex cept as otherwise specific ally p ro v i ded, the commission shall administer the provisions of this chapte r and shall establish the level of quality to be maintained in, and shall control the quality of, the water in this state as provided by this chapte r. W as t e discharg es or impending waste discharg es covered by the provisi ons of t h i s

Acc ording to the Commi ssion, a TMDL is a “quantitative plan that deter mines the amount 3 of a particula

r pollutant that a water body can rec eive and still m ee t i t s appli cable water quality standards.” The TMDL

prog ram addre sses “impaire d or threatened” water bodies in the state and the prog ram’s primary objective i s “t o restore and maintain the benef icial uses (such as drinking water , rec rea tion, support of aquatic life , or fishing ) of impaire d or threa tened water bodies.”
6chapte r are subject to rea sonable rules or order s adopted or issued by the commission

in the public interest. The commission has the power s and duties spec i fi cally presc ribed by this c hapter and all other power s nece ssary or convenie nt to car ry out its responsibilit ies.

Id . § 26.011 (West 2008); see also id . §§ 26.012-.0136 (West 2008). Subchapte r L then bespe aks
the leg islative’s specific direc tive to the Commi ssion, as the primary ag ency for administering chapte r 26 and establi shing water quality levels, conce rning the balanc e betwee n the economic
interests of da iry

CAFOs a nd water quality in the desig nated watersheds. Subchapter L “applies only to a fee ding opera tion confining cattle that have been or
may be used for dairy purposes, or o t h er wi s e associate d with a dairy , including cows, calves, and
b u l l s , in a major sole source impairment zone” and define s “major sole source impairment zo n e” (MSSI Z ). Id

. § 26.502. At the time subchapte r L was enac ted, the North Bosque River water shed 4

Section 26.502 define s a “ma jor sole source impairment zone”: 4

. . . a wa tershed tha t contains a re servoir: (1) that is used by a municipality as a sole source of drinking water supply for a population, inside and ou t s i de of its municipal boundarie s, of more than 140,000; and (2) at l ea s t h al f o f the water flowing into which is from a source that, on the eff ective date of this subchapte r, is on the list o f i mpaired state water s adopted by the commission as require d by 33 U.S.C. Section 1313(d), as amende d: (A) at l east in part because of concerns r eg arding pathog ens and phosphorus; and (B ) for which the commi ssion, at some time, has prepa red and submitt ed a total maximum daily load standar d.

7was the only water shed that fell within the definiti on of a MSS I Z

. Among the statutory chang es, 5 subchapte r L only allows individual—not g ener al—per mits i n the wate rshed for the “construc tion

or opera tion of a new conce ntrated animal fee ding opera tion, or an incre ase in the animals confine d
under a n exis ting ope ration.” See id . § 26.503(a)

. 6 By requiring individual permits in the North Bosque River water shed, the leg islature opted to provide “mea

ningf ul opportunity ” for p er s ons who may be aff ecte d “to voice their

conce rns” and active participa tion in the permitting proce ss, including throug h contested case
hear ings, be fore a new

permit is issued in the water shed. See Tex. W ater Code Ann. §§ 5.115(b) 7 (a t t he ti me an application for permit is administratively complete, “commission shall g ive not ice
of the application to any person who may be aff ecte d by the g ranting of the permit or license” ); 26.503(a) (individual permit require d); Chocolate Bayou W ater Co. & Sand Supply v. Texas Natural

Res. Conservation Comm’n , 124 S.W .3d 844, 850 (Tex. App.—Austin 2003, pet. denied) (af fording public notice in Commi ssion water permit appli ca t i o n contex t “af fords individuals who may be
aff ect ed b y t h e g rant or denial of the permit a meaningf ul opportunity to voice their conce rns and

Tex. W ater

Code Ann. § 26.502 (West 2008).
The Com mission stat es i n its brief: “The North Bosque R iver-L ake Waco sy stem is the 5 only impairment zone.”
O-Ke e Dairy ’s “major” amendment soug ht to incre ase its maxi mum herd to 999 cows, the 6 cut-off number for a “Medium CAFO,” as compar ed to a “L arg e CAFO.” See 30 Tex. Admin. Code § 3 2 1

. 3 2 ( 1 3 ) ( 2 0 1 0 ) ( Co mm is s io n o n E n v ir o n me n ta l Quality , Def

initions ) (“small CAFO,” “me d iu m CAFO,” and “la

rg e CAF O” de fined by

ref ere nce to number

of animals).
The rec ord incl u d es a co p y of the “L eg islative Wrapup” that was posted on the 7 Commi ssion’s website in the summer of 2001. The wra pup states that, in enac ting subchapte r L , the leg islature entered “a hotl y disputed issue over water quality in t h e No rt h Bosque River” and that “lawmakers struc k a compr omise betwee n the city of Waco a

nd are a dair

y opera tions.”
8partic i p at e i n the permitting proce ss by reque sting a contested- case hear ing on the permit

application”) (citing United Copp e r I n d u s ., Inc. v. Grissom , 17 S.W .3d 797, 802 (Tex. App.—Austin 2000, pet. dism’d as moot)); see also Tex. Gov’t Code Ann. § 2001.051 (West 2008).

Be cause O-Ke e Dairy is loc ated on seg ment 1226 of the North Bosque River in the
North Bosque River water shed, it is subject to the require ments of subchapte r L and corr esponding
Commi ssion rules , including additional permitting require ments and stricter waste handling

prac tices. See Tex. Water Code Ann. §§ 2 6

. 5 0 3 -. 5 0 4; see also 30 Tex. Admin. Code §§ 321.42 (2010) (Commissi on on Environmental Quality , Requirements Applicable to the Major Sole-Source

I mpairment Z one). With this contex t, I turn to the parties’ dispute.

The City’s Request for a Cont ested Case Hearing
The City reque sted a contested ca s e h ea ring on O-Ke e Dairy ’s CAFO permit application on the City ’s own behalf and as parens patriae on behalf of its citiz en s
. To support
its reque st, it submitt ed written evidenc e, including aff idavits from Br u ce L

. W i l and, P.E., and
Richard B. Gar

rett, P.E., as well as scientific studies, repor ts and ar t i cl es
. Wil and aver red in
rele vant par

t:

I have been reta ined by the City of Waco as a consulting expert in the field of water quality analy sis, including assessment of the impacts upon L ake Waco of waste and wastew ater discharg es and runoff from dairy conce ntrated animal fee ding opera tions (“CAF Os”) in the w ater shed of the N orth Bosque River. . . .

Ba sed upon my own profe ssional experience , my revie w of the ref ere n c e d s tu dies and
o t h er s p er formed by other experts, my revie w of the ENRS lake study summary repor t, I have the following opinions:

9• The North Bosque River contributes approximately 64% of the total flow to L ake Wac o.

• The North Bosque River contributes more than 72% of the total phosphorus loading to L ake Wac o.

• Dairy opera tions in the water shed of the North Bosque River contribute at least 30 to 40% of the total phosphorous load to L ake Wac o.

• Most of the phosphorus loading to L ake Waco from dairy CAFOs in the North Bosque River water shed occur s in periods of heavy rainstorms, when t h e trave l time from the runoff from dairy waste application fields into th e river a nd downstream to L ake Wac o is short (ty pically less than 5 day s).

• Such rainstorm events car ry phosphoru s an d bacte ria from rea ches of the Nort h Bo sque River water shed as distant from L ake Waco as is the O-Ke e Da iry

.

• The primary cause of heavy alg al bi omass in L ake Waco is the phos phorus t h at is introduced into the L ake from runoff, particula rly from dairy C AF O opera tions in t he upper

North B osque River wa

tershed.

• Source trac king stud i es indicate that dairy CAFO opera tions in the North Bosque River water shed are a source of Enteroc occus and e-c ol i, which can pos sibly be accompanie d by cry ptosporidium, giardia, and other pathog ens, ente ring L ake Wac o. . . .

Ba sed on his knowledg e of “the proce sses by which the runoff and d i s charg es
of pollutants from dairy CAFOs in t h e No rt h Bosque River water shed are adver sely impacting

L ake Waco” and his “re view of the O-Ke e Dairy draf t permit, ‘F act Sheet,’ application, public
comments, and the Ex ecutive Direc tor’s Response to Comments,” he opined to the adver se aff ects

on the City and L ake Waco if the draf t permit wer e approve d. Wil and conclude d the distance from the dairy to L ake Wac o did not dimi nish the adver se ef fec ts:

10The distance of O-Ke e dairy from L ake W ac o d o es not eliminate these

adver se effec ts beca

use t he primary mecha

nism for transport o f t h ese pollutants to L ake Waco is the very heavy rain s t o rms that occur in the North Bosque River water shed, and that wash the phosphorus and bact er i a o ff the fields on which dair y waste and wastew ater are applied, and that can transport these pollutants to L ake Wac o in a matter of 3 to 5 day s.

Gar rett, who was curre ntly and had been the City ’s Municipal Service s Direc tor of the Water Utility , aver

red in re levant par

t:

All adjudicate d and pennitt ed rig hts to the water i mpounded i n L ake Waco
are owned by the City for public water supply , irrig ation, rec rea tion, and other municipal uses. The City is authorized t o d i v er t 78,970 acr e-f eet per y ear for municipal use, including consumption by over 160,000 of its citizens and the citizens of other smaller communities in the are a. Ten of thousands of citizens of Waco fish,
s wi m , sail, ski, and eng ag e in other water rec rea tion in and on L ake Waco ever y y ear
. . . . As shown o n t he two attache d maps, of the five tributaries that flow into L ake Waco, the larg est by far is the No rt h Bosque River, which contributes some 65% of the t otal inflow into L ake Waco. The North Bosque River comprises 74% of the dra inag e ar ea to L ake Wac o, . . . L ake Waco is the sole source of supply of the public water supply sy stem of the City of Waco, e x clusive of emer g ency water connec tions. I t is the only surfa ce water source of the drinking water that the City trea ts and distributes to its 113,000 citizens and to approximately 45,000 residents of sever al small neig hboring municipalities. L ake Waco has been desig nated by [C ommissi on] rules for use as a public water

supply

.

Gar rett also aver

red conce rning (i) studies that show “runof f fr o m dairy -re lated waste application fields” at CAFO dairies as “the primary contributor of soluble phosphorus into both the
North Bosque River and L ake Waco”; (ii) the “ver y considera

ble amount of time, money , and other

resour ces” that the City has incurre d and continues to incur “to protec t its water supply in L ake Waco

11from harm associate d with animal waste” ; and (iii) the adver se aff ect that the proposed permit would
have on the “hea lth and welfa re” of the c itiz ens of the City

.
Review of the Com m ission ’s Denial of the City’s Request

The Commi ssion states in its order deny ing the City ’s re quest for a contested case
hear ing that it considere d the re s p o nses t o the hearing reque st filed by the ex ecutive director, the 8
Offic e of Public I ntere st Counsel, and the applicant, the City ’s reply to the response s, and all timely 9 public comment and that it adopt ed t he executive direc tor’s response to public comment. The
Commi ssion does not direc tly addre ss the City ’s “af fec ted pers o n ” s t at u s. The Commi ssion,
howeve r, conce des that the City complied with the require ments in subsections (A) throug h (D) of
section 55.211(c) (2) and that its sole basis for deny ing the City ’s reque st for a contested case hear ing

was the Commi ssion’s deter mination that the City was not an “af fec ted person.” See 30 Tex. Admin.
Code § 55.211(c) (2). The i s s ue then is whether the C ity was an “af fec ted person” concerning the
O-Ke e Dairy ’s CAFO permit application and, there fore , entitled to a contested case hear ing. See id

.

As an initial matter, I question the majority ’s conclusion that the substantial evidenc e
standard of revie w applies here

. Section 55.211 provides that Co mm is s io n consideration of a reque st

I n the event that the C ommissi on deter mined that the C ity was an “af fec ted per son,” the 8 executive direc tor rec ommended ref err ing nine issues to SOAH conce rning the proposed permit all of which he ag ree d wer e disputed, re l ev an t , and materia l issues raised during the comment period and not wi t h d ra wn
. See 30 Tex. Admin. Code § 55.211(c) (2)( A) (2010) (Commissi on on E n v ironmental Quality , Commi ssion Action on Requests for Reconsider ation and Contested Case He aring ).
The position of the Offic e of Public I ntere st C o u n s el was that the City was an aff ecte d 9 person and that the O-Ke e Dairy permit application should have been ref err ed fo r a co n t est ed
case hear ing.
12for a contested case hear ing is “not itself a contested case subject to the APA.” 30 Tex. Admin. Code

§ 55.211; see Tex. Gov’t Code Ann. § 2001.003(1) (West 2008) (APA define s “conte sted case ” as “a pr ocee ding . . . in whic h the leg al rig hts, duties, or privileg es of a party are to be deter

mined by

a state ag ency afte r an opportunity for adjudicative hear ing” ). Although the Commi ssion could have
ref err ed the issue to SOAH, it chose not to do so and there are no finding s of fac t or conclusions of
law for this Court to review. For substantial evidenc e review to have any meaning , there must be
evidenc e to revie w. See Tex. Gov’t Code Ann. § 2001.174 (West 2008) (su b s t an t i al evidenc e
standard of revie w); see also id

. §§ 2001.060 (re cord in contested case ), .081 (rules of evidenc e applicable to contested case ), .087 (rig ht to cross-e x amination in contested case ); Steadman

v. S ec u r i t ies & Exc h. Comm’n , 450 U.S. 91, 97 n.13 (1981) (“Substantial-evidenc e review by t h e
Court of Appea ls here require d a hear ing on the rec ord.

. . . Otherw ise eff ective revie w by the Court
of Appea ls would have been frustra ted.”) (citation omitted). I further quest i o n t h e m ajority ’s 1 0
relianc e on Colli ns conce rning the applicable standard of revie w. See Colli ns v. Texas Natural Res.

Refer ral to SOAH was cre ated precisely for this ty pe of situ at i o n
. SOAH was “cr eate d 1 0 to serve as an independe nt forum for the conduc t of adjudicative hear ings in the ex ecutive branc h
o f s t at e go vernme nt. The purpose of the office is to separ ate the adjudicative function from t h e investiga tive, prosec utori al, and policy making functions in the executive branc h in rela tion to hear ings that the office is authorized to conduct.” Tex. Gov’t Code Ann. § 2003.021(a) (West 2008);
see Hawkins v. Community Health Choice, Inc ., 127 S.W .3d 322, 325-26 (Tex. App.—Austin 2004,
no pet.) (citing Flores v. Employees Re t. Sys. , 74 S.W .3d 532, 540 (Tex. App.—Austin 2002, pet. denied) ) (discussion of SOAH’s role as a “neutr al fac t-finder ”). SOAH is empower ed to deter mine “‘a djudicative fac ts,’ those that answe r ‘who, what, when, wher e and how’ and are ‘roug hly the kind of fac ts that g o to a jury in a jury case .’” Id

. (quoting Flores , 74 S.W .3d at 539). “‘[G]iven that the
re s o l u t ion of disputed adjudicative fac ts require s weig hing the evidenc e and making cre dibil i t y deter minations, a neutra l decision-make r is cruc ial to a fair adju dicatory hear ing.’ ” Id

. (quoting Flores , 74 S.W .3d at 540). Had the Commi ssion r efe rre d the issue to SOAH , this Court would be able to conduc t a meaning ful revie w, in acc ordanc e with the statutory and re g ulatory

scheme

.

13Conversation Comm’n , 94 S.W .3d 876 (Tex. App.—Austin 2002, no pet.). I n contra st with the fac ts

here , in Colli ns , the Commi ssion ref err ed the disputed materia l fac t i s s u e conce rning the party seeking “af

fec ted person” status to S OA H for deter mination, the administrative law judge (AL J )

enter ed finding s of fac t and conclusions of law, and the Commi ssion adopted the AL J ’s finding s of
fac t and conclusions of law. See id

. at 881. I n that context, this Court revie wed the Commi ssion’s
deter mination for substantial evidenc e.

But, even if I wer e to conc l u d e t h at the standard of revie w is one of substantial
evidenc e, at a minimum , I would reve rse the trial court and rema nd to the Commi ssion for ref err al

to SOAH as to whether the C ity falls wi t hin the definiti on of an “af fec ted person” concerning the
O-Ke e Dair y C AF O p er mit application. See Tex. Water Code Ann. § 5.115(a) ; 30 Tex. Admin.
Code § 55.211(b)( 4). Under the substantial evidenc e standard of revie w, a court “may not substitut e
i t s judgme nt for the judgme nt of the state ag ency on the weig ht of the evidenc e on qu es t i o n s
committed to ag ency discretion but: . . . shall reve rse or rema nd the case for further proce eding s if
substantial rig hts of the appellant have been prej u d i ce d b eca use the administrative finding s,
infere nces, conclusions, or decisions are
. . . ar b i t ra ry o r capricious or char acte rized by abuse of
discretion or clea

rly unwar

ran t ed ex erc ise of discretion.” See Tex. Gov’t Code Ann. § 2001.174(2)( F)

. “An ag ency ’s decision is arbitra ry or results from an ab u s e of discretion if the

ag ency : (1) failed to consider a fac tor the leg islature direc ts it to consider; (2) considers an irrele vant
fac tor; or (3) weig hs only rele vant fac tors that the leg islature dire cts it to c onsider but still rea ches a completely unrea sonable result.” See C i ty of El Paso v. Publi c Util

. Comm’n , 883 S.W .2d 179, 184 (Tex. 1994) (citing Gerst v. Nixon , 411 S.W .2d 350, 360 n.8 (Tex. 1966)).

14I n considering whether an ag ency has abused its discr etion, a re viewing court must

asce rtain those fac tors considere d by the ag ency
. See Gerst , 411 S.W .2d at 360 n.8; Consumers
W ater, Inc. v. Public Util. C o mm ’n , 774 S.W .2d 719, 721 (Tex. App.—Austin 1989, no writ).
“The re must a

ppear a rational connec tion be tween the fac ts and the decision of the ag ency .” Starr County v. Starr Indus. Servs., Inc ., 584 S.W .2d 352, 356 (Tex. App.—Austin 1979, writ ref ’d n.r.e.) (citation omitted). “Stated differ ently , the revie wing court must rema nd ‘.

. . if it conclude s that the

ag ency has not a ctually taken a hard look at the salient problems and has not g enuinely eng ag ed in

rea soned decision-making .’” Id .; see W ebworld Mktg. Group, L.L.C

. v. Thomas , 249 S.W .3d 19, 25 (Tex. App.—Houston [1s t Dist.] 2007, no pet.) (op. on r eh’g ).

To the extent that the Commi ssion relied upon the executive direc tor’s re sponse to
the City ’s reque st and h i s analy sis of the enumer ated fac tors under section 55.203, the executive
direc tor rec ommended that the Commi ssion “find that Waco is not an aff ecte d person in reg ards to
this permit application,” primarily based upon t h e geog raphic distance betwee n O-Ke e Dairy and

L ake Waco and his deter

mination that the “cumulative eff ects” of all dairy CAFO s was not rele vant.
He state d in his written response to the City ’s hea ring reque st:

. . . Waco has water rig hts in L ake Waco, approximately 89 miles downstrea m from the dairy to the surfa ce water intake points on the lak e. Waco’s interest in maintaining water quality in L ake Waco i s p ro t ected by the rules and reg ulations
cover ing this pe rmit a

pplication and there is also a rea sonable rela tionship betwe en the interest claimed and the activity reg ulated. Howeve r, the distance from the dairy to the City of Waco and L ake Waco weig h heavily ag ainst Waco’s claim they are aff ecte d persons for

purposes of this par

ticular pe rmit application. . . . Assuming the d ai ry had a discharg e, the fac ility is approximately 7.2 downstream miles from rea ching the North Bos q u e R i v er, another 75 miles downs trea m to the point wher e the North Bosque enter s L ake Waco, and another 6.8 miles from that po i n t acr oss the lake to the location of Waco’s surfa ce water

15intake for their drinking water supply

. Waco arg ues that it should be g rante d aff ecte d person status as long as a fac ility has the potential to discharg e contaminants that
rea ch L ake Waco, reg ardle ss of distance. I f Waco is aff ecte d in this case , any city in Texas can challeng e any permit upstream of th eir drinking water supply , without reg ard to distance , throug h the CCH proce ss. Additionally , a discharg e from this dairy is unlikely to impact the health and safe ty of persons who drink Waco’s wa t er or to impact the use of the water s of L ake Waco. At 82 mil es u p s t re am of the point wher e the North Bosque enter s L ake Waco the distance is such that i f t here is a discharg e from the fac ility , assimilation and dilution would occur long befor e the water rea ches L ake Waco. Howeve r, even if the discharg e could somehow survive tha t 82 mile trip downstrea m, it would then mix with L ake Waco water and would have to survive further dilution to trave l an additional 6.8 miles acr oss L ak e Waco to rea ch the point wher e Waco extracts drinking water from the lake.

. . . There fore , Waco’s interest is common to members of the g ener al public and does not qualify as a persona l justiciable interest.

The executive direc tor conce ded that the fac tor of “whe ther a rea sonable rela tionship
exis ts betwee n the interest claimed and the activity reg ulated” weig hed in favor of g ranting the City ’s

reque st. See 30 Tex. Admin. Code § 55.203(c) (3). This conclusion is consistent with the scientific data, subchapte r L , and the Commi ssion’s adoption of the TMDL s for t h e North Bosque River

water shed, all of which demonstrate the rela tionship betwee n the interes t claimed—the City ’s
interest in L ake Waco’s water quality —and the activity reg ulated—the opera tions of O-Ke e Dairy , a dair y CAFO loc ated upstre am. Concerning “distance restric tions,” the executive direc tor’s expressed conce rn that,
if the City was an aff

ecte d person in this case , any Texas c ity would be entitled to a contested case
hear ing for any permit located upstream of its water supply source without r eg ard to distanc e. See
id. § 55.203(c) (2). To be sure, if it is shown that the distance from a source of pollution to a city ’s

water intake does not eliminate the potential harm to the city ’s water supply , why should the aff ecte d city be denied the opportunity to be hear d in acc ordanc e with the leg islative direc tive? Fur ther, even

16if that wer e the case conce rning other cities , their “af fec ted person” status in future case s is not
rele vant here and, in any event, would require some fac tual inquiry

. See Starr , 584 S.W .2d at 356. 1 1

To the extent the Commi ssion relied upon the executive direc tor’s conc l u s i o ns

conce rning the “likely impact” of the permit on the “hea lth and safe ty ” of the City ’s citizens and the
“use of the i mpacted natural resource ” by the C ity , his conclusions i g nore the scientific d ata. See
30 Tex. Admin. Code § 55.203(c) (4), (5). The executive direc tor contende d that any rainfa ll runoff

or dischar ge fr o m t he dairy would be diluted beca use of the distance betwee n the O-Ke e Dairy
and L ake Waco. I n rea ching his conclusions, the executive direc tor had to discount the City ’s “over
200 pag es of exhibi ts d o cu m enti ng the nutrient issue as it applies to the North Bosque River
and L ake Waco.” The executive direc t o r co n t ends that the City ’s exhibi ts do not addre ss this particula r applica tion:

None of the documentation submitt ed by Waco identifies the Applicant by name as a source of nutrients. Waco’s issue in this case is not the potential contamination that could be cause d by this particula r dairy , but the cumulative eff ects of all CAFO dairy opera tions in t he Nor

th Bosque w ater shed.

The executive direc tor’s conclusions simply do not square with the rec og nition by the Commi ssion
and the l egi s lature of scientific studies and repor ts showing the adver se impact that dairy

The reg ulatory li m i t at i o n s or restrictions that the C ommissi on ref ere nces in its briefing 1 1 simil arly are not applicable here

. See 30 T ex
. Ad m i n
. Code §§ 55.203(c) (2); 321.38(b)( 1) (Commissi on on Environmental Quality , Control Fa ci l ity Requirements Applicable to CAFOs) (ponds must be at least 500 fee t from a public drinking -wa ter-supply well), 321.40(h) (Commissi on on Environmental Quality , CAFO L and Application Requirements) (cr op fields must be surrounde d by a veg etated buffe r zone of at least 100 fee t), 321.43(j) (Commissi on on Environmental Quality , Air Standard Permit for Animal Fe eding Oper ations (AF Os)) (per manent odor source s must be more than one- fourth or one -half mile f rom occ upied buildings or public pa rks).
17CAFOs have had on L ake Waco. The Com mission adopted T DML s for the water shed, i ncluding

seg ment 1226, and the leg islature enac ted subchapte r L to addre ss t h e adverse impact that dairy
CAFOs have had on water quality in the North Bosque River water shed and on L ake Waco. Fur ther,
the Commi ssion con tinues to acknow ledg e the potential harm to the City from O-Ke e Dairy ’s expanded oper ation. 1 2

Although the executive direc tor also conclude d that “Waco has no authority to

reg ulate dairies located outside its boundarie s in another county ” and “no authority under state law

over whether the dairies comply with 30 TAC Chapter 321, subchapte r B reg ulating CAFOs,” the City ’s interest in the water quality of L ake Waco, as its sole source o f d ri n k i n g water , “is one
p ro t ec t ed by the law under which the application will be considere d.” See 30 Tex. Admin. C o d e § 55.203(c) (1). A core function o f a ci t y i s to protec t its citizens, including protec ting the public drinking water supply

. See Tex. Hea lth & Safety Code Ann. § 121.003(a) (West 2010) (municipality ’s authority to “enf orce any law that is re asonably nece ssary to protec t the public health”) ; Tex. Water Code Ann. §§ 26.171-.180 (West 2008) (authority of local g overnme nts

conce rning public water located within their jurisdiction). Fur ther, a city ’s interest in its sole water

sup p l y i s distinct from the interest common to members of the g ener al public in that a city is statutorily authorized to “enf orce any law that is rea sonably nece ssary to protec t the public health.”
See Tex. Health & Safety Code Ann. § 121.003(a ); 30 Tex. Admin. C ode § 55.203(a ), (c )(6)

.

I n its brief, the Commi ssion rec og nizes that the dairy industry as a whole in the water shed 1 2 has contributed to episodes of taste and odor problems with the City ’s drinking water by contributing nutrients in the water shed as well as the potential for discharg e of phosphorus and rainfa ll runoff into the North B osque River.
18Upholding the Commi ssion’s denial of the City ’s reque st for a contested case hear ing

in the fac e of its own prior conclusions conce rning the impact of dairy CAFOs on the water shed and

L ake Waco defe ats the l eg islature’s d i re ct i v e t o the C ommissi on conce rning the balance between
economic development and water quality pro t ection. I n striking its balanc e, the leg islature has spoken clea

rly an d h as opted for public input and proof throug h contested case hear ings when an
aff ecte d person raises disputed rele vant and materia l issues of fac t. This approa ch allows informed decision-making on the rele vant statutory and reg ulatory require ments and fosters the development
of t he best possible permit that can be i ssued. Affor ding “a ff ec t ed p erson” status and procee ding
with a contested case hear ing on disputed rele vant and materia l fac ts allows the Commi ssion to make
its ult imate dec ision on fully vetted and va lid scientific data.
The Com mission’s decision t o deny the C ity ’s re quest for a contested c ase he aring
lacks transpar ency and substantiation. I n his response to the City ’s reque st, the executive direc tor 1 3
acknow ledg ed nine rele vant and materia l issues o f fa ct conce rning the ultimate decision of
whether or not the Commi s s ion should issue the O-Ke e Dairy ’s CAFO permit and rec ommended

The rec ord raises the question of the role individual leg islators’ pressure play ed in the 1 3 Commi ssion’s decision to deny the City ’s reque st for a hear ing. On J anuar y 25, 2 0 0 8 , the wee k befor e the Commi ssion met to consider the City ’s re q u es t , a state senator faxed a letter to the Commi ssioners reque sting that they deny the City ’s reque st for a contested case hear ing and allow the executive direc tor to issue the final permit to O-Ke e Dairy

. I t was the senator’ s position that the City was challeng ing individual permits as “leve rag e” and that its rea l dispute was with the executive direc tor and the Commi ssion conce rning the Commi ssion’s failure to adopt stricter require ments in its rules in 2004 conce rning CAFO dairies. He also expressed conce rn about the “enor mous expense of an administrative trial ag ainst the City ” that the individual dairy would fac e should the matter be ref err ed to a contested case hear ing, a fac tor not included in section 55.203. See 30 Tex. Admin. Code § 55.203 (West 2010) (Commissi on on Environmental Quality , Deter mi n at i o n o f Affe cted Person); City of

El Paso v. Public Util. Comm’n , 883 S.W .2d 179, 184 (Tex. 1994) (ag ency decision may not be base d upon irrele vant fa ctors).
19ref

err ing those issues to SOAH in t h e ev en t that the Commi ssion conclude d that the City was an
“af fec t ed p er s on.” By deny ing the City ’s reque st then, the commission prec luded a meaning ful opportunity

to adjudicate the se disputed substantive i ssues and the City , attempting to perf orm its
undeniable function of protec ting its citizens’ sole water supply , was prec luded from a “mea ningf ul opportunity ” to be he ard on the se issues. See Choc olate Bayou W ater Co ., 124 S.W .3d at 850.
Co n sidering the documented impair e d c o n d it io n o f th e N o r th B o s q u e Ri v e r w a

te r s h e d
and the water shed’s location upstream from L ake Waco, as well as the Commi ssion’s own scientific
data of the past adver se impact that dairy CAFOs in the North Bosque water shed have had on water quality , I would conclude that the Commi ssion did not eng ag e in rea soned decision-making and that
the fac ts are not rationally connec ted to the Commi ssion’s decision. See Starr , 584 S.W .2d at 355.
The scientific data, as well as the City ’s ex p ert aff idavits, demonstrate the City ’s “per sonal justiciable interest rela ted to a leg al rig ht” (its water rig hts conce rning L ake Waco), “duty ” (its duty

to protec t its sole wa t er supply ), and “ec onomic interest” (its interest in controlling expenses to

prese rve the water quality of L ake Waco) “af fec ted by the administrative hear ing.” See Tex. Water
Code Ann. § 5.115(a)

. I would conclude that the C o m m i s s i o n ’s d ecision that the City is not an
“af fec ted person” is arbitra

ry or charac t er i z ed b y abuse of discretion. See Tex. Gov’t Code Ann. § 2001.174(2)( F) ; Starr , 584 S.W .2d at 355. I n sum, the Commi ssion’s denial of the City ’s hear ing

reque st is antithetical to the tex t, structure a nd purpose of

the wate r code

.
The Majority’s Opinion

The majority

conclude s that the Commis sion’s deter mination that the C ity

was not

an “a ffected person” was supported by substantial evidenc e based upon the Commi ssion’s

20deter

mination that “g ranting this permit would have an overa ll benef icial environmenta l impact and
there fore would not adver sely aff ect the City .” The majority discusses the substance of re quired 1 4

opera tional chang es in the proposed permit, the stricter require ments in the “new ” reg ulations, and
the executor direc tor’s statement in his response to public comment that the proposed permit should “sig nificantly re d u ce the potential for pollutants enter ing rec eiving water s.” By addre ssing these issues, the executive direc tor—and the majority —have leape d into the deep water s of the merits of
the ca se which c annot be r esolved without a he aring

.

The majority primarily relies upon Colli ns in rea ching its conclusion that substantial

e v id e nce supports the Commi ssion’s deter mination not to aff

ord “af fec ted person” status to the City

. The issue befor e this Court in Colli ns , howeve r, is not analog ous. I n addition to the Commi ssion’s adoption of the AL J ’s finding s of fac t a nd conclusions of law for this Court to revie w, we decide d
Colli ns under a prior version of section 5.115. See 94 S.W .3d at 881-82. And there wer e distance 1 5
limit s on a per son’s standing to contest the issues—primarily nox ious odors—there:

I disag ree with the majority ’s char acte rization of the Commi ssion’s basis for its decision 1 4 to deny the City a contested case hear ing. The Commi ssion’s order is silent conce rning the basis for its decision.
Be fore its amendment in 1999, section 5.115 of the w ater code pr ovided: 1 5
The commission is not require d to hold a hear ing if the commission deter mines that the basis of the person’ s reque st for a hear ing as an aff ecte d person is not rea sonable or is not supported by

competent e vidence

. Act of Ma

y 28, 1995, 74th L eg ., R.S., ch. 882, § 1, 1995 Tex. Gen. L aws 4380, 4381 (T ex. W ater Code Ann. § 5.115(a) ), since amende d by Act of May 30, 1999, 76th L eg ., R.S., ch. 1350, § 1, 1999 Tex. Gen. L aws 4570.
21The map that the AL J found to be acc urate indicates t h at Colli ns’s proper ty is not adjac ent to B& N’s proper ty and that his home is approximately 1.3 miles awa y from the proposed lag oons. Colli ns p re d i ct s that the lag oons will produce “noxious odors.” But a conce ntrated animal fee ding opera tion, such as B& N’s far m, qualifies for a standard air permit—issued without the opportunity for a contested case hear ing—if its perma

nent odor source s are at least half a m i l e from occupie d residenc es and business struc tures.

Id

. at 882-83. F inally , the denial of a single far mer’s reque st f

or a contested case hear ing does not
equate with a g overnme ntal body char g ed with protec ting its citizen’s sole water supply

. See also
Grissom , 17 S.W .3d at 803 (Commission erred in deny ing reque st for a contested case hear ing by

a person living within two miles of copper melting furna ces opera tion based upon health conce rns).

An “af fe ct ed p erson” serve s the role of perc olating the materia l issues conce rning
the merits of a permit application, ena bling the Commi ssion to make an informed decision.

Her e, i t woul d allow one based on scientific data. The majority ’s decision aff irming the
Commi ssion’s denial of the City ’s reque st for a contested case hear ing disrupts the balanc e betwee n
economic development and water quality protec tion that the leg islature struck w hen it aff orded a n
“af fec ted person” the rig ht to a contested case hear ing co n ce rn i n g a CAFO permit upon an
appropr iate showing

.

CONCLUSION

The Commi ssion is char g ed with the stewar dship of our rivers, and national water policy only succe eds to the extent eac h jurisdiction perf orms its reg ulatory function. T h e 1 6

Texas has 80,000 miles of water way s that meande r throug h the Texas landsca pe g ener ally 1 6 flowi n g i n t o estuarie s and supporting rese rvoirs, wetlands, and terre strial are as. These important aquatic ecosy stems play a major role in protec ting water quality for all citizens, preve nting erosion,
22Commi ssion’s arbitra ry decision to deny the City “af fec ted person” s t at u s o pera tes to stifle
the leg islative direc tive, the ad m i n i s t rative proce ss, and its reg ulatory function. Moreove r, the 1 7 City ’s reque st for relief is modest, a meaning ful hear ing on disputed materia l issues of fac t
that the executive direc tor ag ree s are rel ev an t t o t he permit application. For these rea sons, I

respe ctfully

dissent.

and providing nutrients and habitat for fish and wildlife for this and future g ener ations. “Just as y ou fee l when y ou look on the river a nd the sky , so I felt . .

. Flow on, river! flow with the flood-tide, and ebb with the ebb-tide! .

. . drenc h with y our spl endor me, or t he men and wo m en gen er ati ons afte r me!” Walt Whit man, Leaves of Grass (185 5 ). “A whole river is mountain country and hill country and flat co untry and swamp and delta country , is rock bottom and sand bottom and wee d bottom and mud bottom, is blue, g ree n, red, clea r, brown, wide, narr ow, fast, slow, clea n, and filthy water , is all the kinds of tree s and g rasse s and all the bree ds of animals and bir d s an d men that perta in and have ever pertained to its chang ing shores, i s a t h o usand di ffe ring and not compatible things in-betwe en that point whe re enoug h of the highla nd drainlets have trickled toge ther to f orm it, a nd that wide, flat, probably desolate place wher e it discharg es itself into the salt of the sea
. . . . [I ]f y ou are built like me, neither the cer tainty of chang e, nor the need for it, nor any wry philosophy will kee p y o u fr o m fee ling a cer tain enra g ed awe when y ou hear that a river that y ou’ve known alway s, and t hat all men of that place have known back into the r ed daw n of men, will shortly not exis t.” J ohn Gra ves, Goodbye to a River 4, 8-9 (1959)

. I also question the majority ’s conclusion that the City “re ceive d all the proce ss it was due.” 1 7 See University of Tex. Med. Sch. v. Than , 901 S.W .2d 926, 930 (Tex. 1995) (citations omitted) (“D ue proce ss a t a minimum require s notice and an opportunity to be hear d at a meaning ful time and in a meaning ful manner .”). The public meeting that the majority ref ere nces lasted less than an hour, and there was no substantive discussion of the permit application. The only substantive statements wer e from a repr esenta tive for the City who stated that the City stood b eh i n d i ts written response and ref err ed the Commi ssion to those comments. The rema ining people to spe ak at the meeting either expressed their support for the dairy industry g ener ally , noted the delay in the issuance of the permit, and/or their persona l opinion that the O-Ke e Dairy permit should be issued. Acc ording to the City , the City was not allowe d to speak a t the Commi ssion meeting in January 2008.
23__________________________________________ J an P. Patterson, J ustice

Be fore J ustices Patterson, Pury ear and Pember

ton Filed: September

17, 2010

24