TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-02-00218-CV
BFI Waste Systems of North America, Inc. and Texas Natural Resource Conservation Commission, Appellants
v.
Martinez Environmental Group, City of China Grove, and Don McKenzie, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NO. GN003403, HONORABLE F. SCOTT McCOWN, JUDGE PRESIDING
This case involves an urban landfill=s application to permit a major expansion. As cities
grow, area landfills reach capacity. Attempts to obtain new landfill space, although necessary, are always
unpopular with nearby landowners. BFI operates a landfill in east San Antonio. After several incremental
expansions, it applied to the Commission1 for an expansion permit that would more than triple the landfill=s
size and allow it to operate for approximately fifty-seven more years before it reached capacity. Nearby
1 By statute effective September 1, 2001, the legislature changed the name of the Texas Natural Resource Conservation Commission to the Texas Commission on Environmental Quality, to be effective January 1, 2004. The statute granted the TNRCC authority to adopt a timetable for phasing in the change of the agency's name, so that until January 1, 2004, the agency may perform any act authorized by law under either title. See Act of April 20, 2001, 77th Leg., R.S., ch. 965, ' 18.01, 2001 Tex. Gen. Laws 1985. On September 1, 2002, the agency began using its new name, while continuing to recognize the former. Because the parties have referred to the agency as the Commission in the briefs and at oral argument, we will do so as well in this opinion. residents formed an organization, Martinez Environmental Group, to oppose BFI=s permit application. They
were joined in their opposition by the nearby City of China Grove and an adjacent business owner Don
McKenzie (collectively MEG). After a contested case hearing, the Commission approved BFI=s application
and issued the expansion permit. MEG then sought judicial review in Travis County district court. See Tex.
Gov=t Code Ann. '' 2001.171, .176 (West 2000). MEG claimed among other things: (1) that the permit
approves a site operating plan that is not detailed enough to comply with Commission rules; (2) that BFI
was required, and failed, to prove that it was entitled to a permit of lifetime duration at the contested case
hearing; and (3) that evidence was improperly excluded at the contested case hearing. The district court
agreed with MEG on the first two issues and remanded the case to the Commission with detailed
instructions. The court did not rule on MEG=s evidentiary complaints. We agree with the district court that
the site operating plan is insufficient and affirm that part of its judgment. We disagree with the district court=s
ruling that the Commission misinterpreted its own rule regarding the life of the site, reverse that part of its
judgment, and render judgment reinstating the Commission=s decision on the site=s duration.
BACKGROUND
BFI is in the waste disposal business. It operates several solid waste facilities across the
country, including the Tessman Road Landfill in east San Antonio. The Tessman Road Landfill currently
serves the city of San Antonio and several surrounding communities. In 1981, BFI obtained a permit to
operate a below-ground landfill on 159 acres at this site. In 1985, BFI secured a permit allowing it to add
106 adjacent acres to the landfillCbringing the site=s total area to 265 acres. Twelve years later, BFI
received a permit to expand its landfill vertically. This case concerns BFI=s latest application to expand the
2 landfill by adding 664 adjacent acres and by further increasing the landfill=s maximum height. This
considerable expansion would extend the life of the landfill by approximately fifty-seven years. The
Commission granted the expansion permit in 2000 after a contested case hearing.
BFI filed this latest permit application with the Commission in November 1997. The
Commission processed the application according to its rules. In February 1998, the Commission=s
executive director declared that the application was administratively complete. See Tex. Health & Safety
Code Ann. ' 361.068 (West 2001); 30 Tex. Admin. Code ' 281.17(d) (2002). The executive director
and his technical staff then conducted a technical review of the application. See 30 Tex. Admin. Code '
281.19(a) (2002). In January 1999, the executive director determined that the application was technically
complete. The executive director then prepared a draft permit, stating: AThis permit will be valid until
cancelled, amended, or revoked by the Commission, or until the site is completely filled or rendered
unusable, whichever occurs first.@ See id. ' 281.21.
MEG opposed the application, causing the matter to be referred to the State Office of
Administrative Hearings (SOAH) for a contested case hearing. 2 MEG, the executive director, and others
were admitted as parties. At the contested case hearing, MEG argued that the expansion permit should be
denied on several grounds. Among other things, it challenged the adequacy of BFI=s site operating plan for
control of windblown waste, odor, light, noise, and other nuisance concerns, and for its proposed use of an
2 This contested case hearing was somewhat unique in that two administrative law judges (ALJs) conducted the entire hearing and collaborated in their proposal for decision, findings of fact, and conclusions of law.
3 alternative material, rather than dirt, as a daily cover for the site. MEG also argued that the permit, if issued,
should be of limited duration, not for the life of the landfill.
After making certain revisions requested by MEG, requiring dirt as the daily cover and
providing for better monitoring of windblown waste, the two ALJs issued a proposal for decision
recommending that the Commission grant the permit. The ALJs also issued proposed findings of fact and
conclusions of law on several of the contested issues. Although the proposal for decision specifically rejects
MEG=s challenge to the lifetime duration of the permit, the ALJs inexplicably failed to address this issue in
their findings of fact and conclusions of law. The Commission issued an order that incorporated the ALJs=
recommended permit revisions, adopted the ALJs= findings of fact and conclusions of law, and approved
BFI=s application for expansion of the landfill for the life of the site.
MEG then filed a motion for rehearing, complaining among other things that: (1) the site
operating plan in BFI=s permit application failed to comply with chapter 30, section 330.114 of the Texas
Administrative Code, which requires that Athe site operating plan . . . shall provide operating procedures for
the site management and site operating personnel in sufficient detail to enable them to conduct the day-to-
day operations of the facility@; (2) the ALJs improperly shifted the burden of proof on the duration issue to
MEG, and BFI failed to prove that it was entitled to a lifetime permit; and (3) the ALJs improperly excluded
relevant evidence of BFI=s compliance history at this and other BFI landfills. MEG=s motion for rehearing
was overruled by operation of law. The Commission then issued the amended permit and MEG brought
this action for judicial review in district court.
4 In its suit for judicial review, MEG raised the same complaints noted in its motion for
rehearing. In its judgment, the district court found that the Commission failed to follow its own regulations
both in approving the site operating plan and in granting the permit for the life of the landfill site. The court
also issued several specific instructions to the Commission for handling the duration issue on remand.3 The
court declined to rule on MEG=s evidentiary complaints, stating however that A[u]pon remand . . . the court
assumes that the administrative law judge will consider properly proffered evidence of problems in other
BFI solid waste facilities . . . to determine the >sufficiency= of the site operating plan for this facility.@
DISCUSSION
Whether the Commission failed to follow its own rules presents a question of law. See
Sonic Drive-In v. Hernandez, 797 S.W.2d 254, 255 (Tex. App.CCorpus Christi 1990, writ denied).
Essentially, we must decide if the district court erred in rejecting the Commission=s interpretation of its own
regulations. Valid agency rules have the same force and effect as statutes. Generally, we construe agency
3 The judgment specifically states:
Upon remand the ALJ must (1) determine whether the regulatory presumption shifts the burden of production or persuasion, (2) then consider all the evidence, and (3) then make findings of fact and conclusions regarding the duration of the permit. Based on the decision of the executive director, the commission must then make an order that specifies the duration of the permit.
5 rules in the same manner as statutes, striving to give effect to the agency=s intent and following the plain
language of the rule unless it is ambiguous. Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d. 248, 254
(Tex. 1999); H.G. Sledge Inc. v. Prospective Inv. & Trading Co., 36 S.W.3d. 597, 603 (Tex
App.CAustin 2000, pet. denied). But if there is vagueness, ambiguity, or room for policy determinations in
the regulation, we will defer to the agency=s interpretation unless it is plainly erroneous or inconsistent with
the language of the rule. H.G. Sledge, 36 S.W.3d at 604. Because it represents the view of the regulatory
body that drafted and administers the rule, the agency interpretation actually becomes a part of the rule
itself. See McMillan v. Texas Nat. Res. Conservation Comm=n, 983 S.W.2d 359, 362 (Tex.
App.CAustin 1998, pet. denied).
Permit Duration
The Commission=s rule for municipal solid waste facilities establishes the Alife of the site@ as
the default duration period but grants the executive director discretion to shorten this period: AA permit is
normally issued for the life of the site . . . . When deemed appropriate by the executive director a permit
may be issued for a specific period of time.@ 30 Tex. Admin. Code ' 330.63 (2002).
The district court found that, as a matter of law, the Commission failed to follow this rule on
three grounds: (1) the Commission confused the roles of the commissioners, the executive director, and the
ALJs; (2) the ALJs misapplied the law of presumptions by requiring MEG to proffer conclusive evidence
showing that the permit should not be for the life of the site; and (3) the Commission did not issue findings of
6 fact or conclusions of law on this contested issue. We agree with BFI and the Commission that the district
court=s first two grounds are erroneous and that its third ground was not properly preserved.4
To support its finding that the Commission=s reading of the rule confused the roles of the
commissioners, the executive director, and the ALJs, the district court opined that the agency interpretation
allows the executive director to Aunilaterally decide the duration of the permit . . . and thereby determine the
[C]ommission=s order.@ We disagree. Under the Commission=s reading of the rule, the executive director
can, in his discretion, shorten the normal duration period. If, as here, the executive director does not
exercise his discretion to shorten the period, interested parties can argue for a shorter period in a contested
case hearing. The commissioners will then decide the issue based on the ALJs= proposal for decision.
4 The district court refers to considerations of due process and compliance with the APA in reaching its decision that the Commission misread its permit-duration regulation. BFI argues that MEG did not preserve any complaint that the Commission Aviolated due process or the APA.@ We do not think the district court found such a violation. The district court drafted its order similar to an appellate opinion, laying out its reasoning. We construe its references to due process and the APA as a part of this reasoning. The court apparently used considerations of due process and compliance with the APA as aids to construction of the rule.
7 The rule unambiguously states that solid waste facility permits are normally issued for the life
of the site and that the executive director can shorten this period when he deems a shorter period
appropriate. However, this failure to shorten the duration of the permit may still be contested, as it was
here. We do not see how the executive director=s failure to shorten the period amounts to Aunilaterally
decide[ing] the duration of the permit,@ when an interested party can argue for a shorter period at a
contested case hearing. 5
5 Under the district court=s reading of the rule, the executive director is never to make an initial decision on the site=s duration. Instead, ALJs must make the initial determination in a contested case hearing. According to the district court, the ALJs are then to send their proposal for decision to the executive director instead of the commissioners; and only then is the executive director to decide the site=s
8 duration Abased upon the ALJs= findings and conclusions. . . . [and] forward his decision to the commission for its consideration as part of its order.@
The district court=s interpretation is problematic. It disregards the plain language of the rule and construes it in isolation, ignoring the fact that the executive director is required to issue a draft permit after it completes a technical review. See 30 Tex. Admin. Code '' 281.19(a), .21(b). If the district court is correct, an initial draft permit must always be of lifetime duration because the executive director has no discretion to impose a shorter period until the application is challenged and sent to SOAH for a contested case hearing. But the rule plainly states that the executive director can shorten the duration period when he deems a shorter period appropriate.
The district court is also less than clear about the role it envisions for the executive director. Ordinarily, after a contested case hearing, a proposal for decision is forwarded to the commissioners who then make the final determination on all contested issues. But under the district court=s interpretation the executive director is interposed between the ALJs and the Commission on one issueBduration. It is not clear what weight the executive director =s recommendations are to carry. For example, can the executive director override the proposal of the ALJs? If the Commission had intended such an unusual process when it drafted section 330.63, it would surely have been more explicit about it.
9 The Commission=s interpretation of the rule is well illustrated by the facts of this case. After
completing a technical review of the application, the executive director decided not to exercise his discretion
to shorten the duration of the permit. This decision was memorialized in the executive director=s draft
permit. When MEG opposed the application, the contested issues, including the duration issue, were sent
to SOAH for a contested case hearing. The executive director, MEG, and BFI, were made a parties to this
hearing. There, a member of the Commissioner=s staff testified that the draft permit was a preliminary
document subject to change as a result of the evidence presented at the hearing. At closing argument, the
executive director recommended that the Commission issue the draft permit for the life of the site.
We cannot say that the Commission=s interpretation of the roles of the executive director,
the ALJs, and the commissioners, is plainly erroneous or inconsistent with the language of the rule.
The district court also found that the ALJs misapplied the law of presumptions by requiring
MEG to proffer conclusive evidence showing that the permit should not be for the life of the site. This is not
the case. We agree with MEG that at a contested case hearing Athe burden of proof is on the moving party
by a preponderance of evidence.@ 30 Tex. Admin. Code ' 80.17(a) (2002). But we do not think that the
ALJs actually required MEG to present Aconclusive evidence@ on the issue of duration. The ALJs wrote:
That the legislature and/or Commission has seen fit to impose time requirements as to certain types of permits, but not others, reflects a regulatory intent that should not simply be disregarded by the ALJs. It is presumed that the Commission was aware of the time limitations for many types of permits, while still providing that MSW permits are to be Anormally issued for the life of the site.@ 30 Tex. Admin. Code ' 330.63(a). The ALJs see no reason to disregard the wording of this rule, absent conclusive evidence showing such a need.
10 Throughout their proposal for decision, the ALJs use the word Aconclusively@ in a colloquial
manner. For example, when discussing use of alternative material for daily cover they write:
While Protestants= evidence does not conclusively establish that all the problems experienced by local residents with odors, windblown waste, and vectors are related to the landfill, let alone the use of tarps, this is not dispositive. It is similarly true that Applicant did not conclusively establish that the Landfill and, more specifically, the use of tarps, does not contribute at all to the odor, windblown waste, and vector problems experienced by local residents. While it may be difficult to prove a Anegative,@ it is Applicant=s burden to establish that the proposed Permit terms will enable the Landfill to be in compliance with the MSW [municipal solid waste] rules. (Emphasis added).6
6 There are other examples as well. When discussing the credibility of one of BFI=s witness the ALJs wrote: AWhile the evidence indicated a strong likelihood that the bottom of the landfill had been penetrated during drilling . . . such was not conclusively established. Moreover, such is not a dispositive issue in this proceeding.@ (Emphasis added.)
11 Colloquial use of the word Aconclusively@ is confusing and should perhaps be avoided in proposals for
decision, particularly in light of the fact that there is a conclusive evidence standard elsewhere in the law.7
But the language in the proposal for decision in this case does not indicate that the ALJs applied an incorrect
standard of proof. Because the rule directs the permit to be issued for the life of the site, it was MEG=s
burden to establish by a preponderance of the evidence that the period should be shortened. The ALJs
considered MEG=s concern and recommended that the permit be granted for the life of the site. The
commissioners followed the ALJ=s recommendation and we find substantial evidence in the record
supporting this agency action.
The district court also found that the Commission Aerred by issuing a permit for the life of
the site without any findings of fact or conclusions of law on this issue.@ ALJs should always include findings
of fact and conclusions of law on each issue before them.8 But because MEG did not complain in its motion
7 To be entitled to a summary judgement in civil court a plaintiff must conclusively establish each element of his claim while a defendant must either conclusively establish each element of an affirmative defense or conclusively negate an element of the plaintiff=s claim. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). 8 The ultimate facts disputed during a contested case hearing do not always require detailed findings of underlying facts. See Texas Health Facilities Comm=n v. Charter Med.-Dallas, Inc., 665 S.W.2d
12 for rehearing about the Commission=s failure to make findings and conclusions on permit duration, this issue
was not preserved for review.
A motion for rehearing is a statutory prerequisite to an appeal in a contested case. Tex.
Gov=t Code Ann. ' 2001.145(a) (West 2000). The purpose of a motion for rehearing is to appraise the
agency of the claimed error and allow the agency the opportunity to correct the error or prepare to defend
against it. Suburban Util. Corp. v. Public Util. Comm=n, 652 S.W.2d 358, 365 (Tex. 1983); Hill v.
Board of Trs. of Ret. Sys., 40 S.W.3d. 676, 678 (Tex. App.CAustin 2001, no pet.). The timely filing of a
motion for rehearing is jurisdictional, but the sufficiency of the motion=s content goes solely to the issue of
preservation of error. Hill, 40 S.W.3d at 679. The motion must set forth: (1) the particular finding of fact,
conclusion of law, ruling, or other action by the agency which the complaining party asserts was error; and
(2) the legal basis upon which the claim of error rests. Burke v. Central Educ. Agency, 725 S.W.2d 393,
397 (Tex. App.CAustin 1987, writ ref=d n.r.e). To preserve error, both elements must be present in the
motion, but neither requires a briefing of the law and the facts. Id. The standard is one of fair notice. See
id.
MEG did complain about the lack of findings of fact and conclusions of law in its exceptions
to the ALJs= proposal for decision. But in its motion for rehearing MEG claimed only: (1) that the ALJs
446, 450-51 (Tex. 1984) (underlying findings only required when ultimate finding is mandatory because set forth in relevant enabling act). Nonetheless, an agency must always include findings of fact and conclusions of law to support its decision on a contested issue. See Tex Gov=t Code Ann. ' 2001.141(b) (West 2000).
13 improperly shifted the burden of proof to MEG on the duration issue; (2) that the Commission arbitrarily
failed to exercise its discretion to limit the site=s duration period; (3) that Aoverwhelming evidence@ supports
MEG=s request for a limited duration period.
These alleged errors cannot be construed as encompassing or implying a complaint about
the lack of findings of fact and conclusions of law on the duration of the permit. Moreover, because MEG
had specifically complained about the absence of such findings in its exceptions to the ALJs= proposal for
decision, the Commission was entitled to conclude that MEG had abandoned this complaint. See Ross v.
Texas Catastrophe Prop. Ins. Ass=n, 770 S.W.2d 641, 643-44 (Tex. App.CAustin 1989, no writ)
(pleadings filed before agency renders final order challenge only the proposal for decision). MEG=s motion
did not set forth the agency action that the district court found to be errorCthe failure to include findings of
fact and conclusions of law on the issue of duration. This alleged error was therefore not preserved for
review.
We reject the district court=s ruling that the Commission did not follow chapter 30, section
330.63 of the Texas Administrative Code in determining the duration of the permit. We therefore reverse
this part of the district court=s order and render judgment reinstating the Commission=s decision regarding
the site=s duration.9
9 In a suit for judicial review of an agency action, the reviewing court is empowered to issue only a general remand when it finds error that prejudices an appellants substantial rights. See Tex. Gov=t Code
14 Site Operating Plan Detail
An applicant must submit a detailed site operating plan as a part of its landfill permit
application. 30 Tex. Admin. Code. '' 330.57 .114 (2002). A detailed, enforceable, site operating plan is
crucial in light of the fact that permits are normally granted for the life of the landfill. When landfill
expansions are frequent and incremental, affected parties can challenge the reoccurring expansion
applications. But when major expansions are involved, as here, the next permit application may be decades
away. Detailed site operating plans allow affected parties to maintain some oversight of these large landfills.
BFI was required to submit a site operating plan that Aprovide[s] operating procedures for the site
management and site operating personnel in sufficient detail to enable them to conduct the day-to-day
operations of the facility.@ Id. ' 330.114. The rule further requires that A[a]s a minimum, the SOP shall
include specific guidance, procedures, instructions, and schedules on: . . . the procedures that the operating
personnel shall follow concerning the operational requirements of this subchapter.@ Id. The district court
found that, as a matter of law, BFI=s site operating plan does not comply with this regulation. We agree and
will affirm the district court=s judgment on this issue.
Ann. ' 2001.174 (West 2000). The district court therefore erred by including in its judgment detailed instructions on how the commission should determine the duration issue on remand. However, because we hold that the agency interpretation of the rule is valid, we need not address this point in detail.
15 The Commission and BFI claim that because MEG did not detail every alleged insufficiency
of the plan in its motion for rehearing it therefore did not preserve a challenge to the entire site operating
plan. We disagree. MEG=s motion for rehearing sufficiently challenges the entire plan:
BFI failed to demonstrate that its site operating plan, including the plan for windblown waste, >provide operating procedures for the site management and the site operating personnel in sufficient detail to conduct the day-to-day operations of the facility,= as required by [chapter 30, section 330.114 of the Texas Administrative Code].
MEG then pointed out several specific insufficiencies, and concluded that:
These >plans,= like most of BFI=s Site Operating Plans, are little more than a restatement of what the rules require. They are not true plans. Clearly they are not sufficient to meet the requirements of [chapter 30, section 330.114 of the Texas Administrative Code]. The Commission should reconsider its decision granting BFI=s application and should require specific, detailed, operating plans that will ensure that BFI will cease causing nuisance conditions.
This language was itself sufficient to preserve MEG=s complaint about the entire site
operating plan. It clearly sets out the agency action that it asserts was errorCthe Commission=s failure to
follow chapter 30, section 330.114 of the Texas Administrative Code. MEG was not required to provide a
detailed briefing of the law and the facts surrounding its complaint. See Burke, 725 S.W.2d at 397.
Instead of setting out specific operating procedures in its regulations, the Commission=s rules
consist of general requirements that allow landfill operators to develop specific operating procedures
tailored to their individual sites. These specific procedures must be included in a detailed site operating plan,
16 and deviation from an approved site operating plan will be deemed a violation of the administrative code.
See 30 Tex. Admin. Code '' 330.57, .111 .114.
Much of the BFI=s site operating plan merely mimics the broad language of the code
sections that it is supposed to implement. For example, section 330.115 requires a landfill operator to
Amaintain a stockpile of earth within 2,500 feet of the working face or active disposal area,@ while the site
operating plan requires Aa stockpile of earth sufficient to cover the entire working face or active disposal
area will be maintained within 2,500 feet of the active disposal area.@10
There are no detailed general rules to guide the daily operation of a municipal solid waste
plant. The Commission has rejected a one-size-fits-all approach to regulation, in favor of individual site
operating plans tailored to meet specific locations. Each site operating plan must therefore provide specific,
enforceable procedures to govern the daily operation of a specific landfill. The exact level of detail required
of each individual section of a plan is a matter of agency discretionCbut, at a minimum, a plan must set out
enforceable procedures and be more detailed than the general rules that it implements. We affirm the
district court=s ruling that BFI=s site operating plan does not comply with chapter 30, section 330.114 of the
Texas Administrative Code.
10 There are several additional sections of the site operating plan that do little more than echo the general language of the code sections they are supposed to implement.
17 Other Issues
The district court did not rule on MEG=s complaint that the Commission improperly
excluded relevant evidence of BFI=s compliance history at this and other landfills. It is similarly unnecessary
for us to rule on this point. On remand, the ALJs can determine the admissibility of this and other evidence
in light of our holding that BFI must provide a more detailed site operating plan.
Finally, BFI and the Commission claim that the district court erred by vacating the
Commission=s order instead of reversing it. In its judgment, the district court uses the terms Avacate@ and
Areverse@ interchangeably. We agree with BFI and the Commission that the district court had no authority
to vacate the Commission=s order. See Tex. Gov=t Code Ann. ' 2001.176(b)(2) (West 2000). However,
we construe the district court=s judgment to reverse, not vacate, the Commission=s order.
CONCLUSION
We agree with the district court=s ruling that the site operating plan is insufficient and affirm
that part of its judgment. We disagree with the district court=s ruling that the Commission misinterpreted its
own rule regarding the life of the site. We reverse that part of its judgment and render judgment reinstating
the decision of the Commission regarding the site=s duration. The scope of the district court=s remand to the
Commission is modified accordingly. This cause is remanded to the Commission for further consideration of
the site operating plan.
18 Bea Ann Smith, Justice
Before Justices Kidd, B. A. Smith and Yeakel
Affirmed in Part; Reversed and Rendered in Part
Filed: November 21, 2002
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