Both U.S. Supreme Court and Texas Supreme Court Make Headlines on Significant Administrative Law and Water Quality Issues

by Nathan E. Vassar

Earlier this summer, both the Supreme Court of the United States (“SCOTUS”) and the Supreme Court of Texas (“SCOTX”) generated headlines that will have implications to the regulated community both in Texas and on a national scale. First, in mid-June, SCOTX announced it would take up the long-fought-over case involving the Texas Commission on Environmental Quality’s (“TCEQ’s”) issuance of a discharge permit to the City of Dripping Springs. Tex. Comm’n on Env’t. Quality v. Save Our Springs All., 668 S.W.3d 710, 716 (Tex. App.—El Paso 2022, pet. granted). That case addresses water quality concerns from an environmental organization and asks whether the TCEQ’s antidegradation review was sufficient in light of nutrient loadings under the permit. A couple of weeks later, SCOTUS abandoned a long-established precedent of giving deference to administrative agency decisions, ending what has been known for decades as “Chevron deference.” Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). Both cases present important issues for utilities and private entities alike, and may lead to additional litigation down the road over a broad range of topics, including TCEQ processing of TPDES permits as well as any federal rulemaking and guidance decisions. They also both challenge the underlying premise that specialized agencies should have the benefit of the doubt when it comes to following their own rules.

First, on the Texas front, the Dripping Springs case presents novel issues concerning nutrient loadings and the manner in which TCEQ analyzes potential degradation of water quality. The case, which has been ongoing for more than five years at this point, involved Dripping Springs’ discharge permit application and TCEQ’s issued permit for a discharge into Onion Creek. Following the state approval of the permit, Save our Springs Alliance initiated an administrative appeal, and successfully convinced the Travis County District Court that the TCEQ did not follow required antidegradation rules in light of the total nutrient loadings that would be introduced into the watercourse. Subsequent to that, the appellate court reversed, finding that TCEQ did, in fact, properly issue the permit, and its reliance upon TCEQ Implementation Procedures was appropriate. Now the SCOTX will decide what is a highly technical, but greatly consequential question on whether TCEQ’s practice of following its internal protocols in antidegradation review was sufficient for this permit.

The broader implications of the Dripping Springs case affect both water quality permitting issues as well as the bigger question of how much deference TCEQ should be afforded in making permitting decisions. The antidegradation question—hinging on whether water quality would be compromised by more than a “de minimus” amount (and de minimus is not defined)—could potentially write the script for challenges to TPDES permits statewide if the TCEQ permitting decision is overturned. Does the introduction of nutrients—on its own—mean that water quality is impaired by more than the allowable amount? Many will watch this case carefully in the coming months with an eye toward policy implications.

At the federal level, the Loper decision provides earth-shattering changes to the federal practice of administrative law. For those who have not had occasion to engage in the finer points of lawsuits against federal agency decisions, the basics of the previous “Chevron deference” were this prior to June 2024: if a court agreed that a Congressionally-enacted statute was ambiguous, then that court would then ask if the federal agency, in interpreting such statute, had a reasonable basis for interpreting that law in the manner that it did. Thus, there was a finger on the scale supporting an EPA rule or policy decision (to pick one agency). More simply put, if in doubt, then benefit of the doubt goes to the federal agency. That is no longer the case after Loper. In the majority opinion (6-3), Chief Justice Roberts wrote the deference presumption is “a fiction,” and then observed that federal courts have, for years at this point, effectively ditched the practice of tie-goes-to-the-agency, in light of often-aggressive rulemaking efforts that have pushed the limits of what Congress ever intended for a federal agency to regulate.

What the death of Chevron means for practitioners and utilities alike is two-fold: 1) there will likely be more challenges to EPA, USACE, USFWS (and every federal agency, for that matter) decisions when there is a close question of whether that agency is following Congressional intent; and 2) there will likely be a more constrained agency approach when there are close questions, subject to the directive of the Executive Branch. Although courts themselves will not make policy decisions on underlying environmental regulations, their role in policing agency overreach will be enhanced.

Both the Dripping Springs and Loper cases present important issues that we will continue to track in the months ahead, as SCOTX evaluates the merits of the TCEQ permitting decision, and as, on the federal side, we see additional challenges to administratively-approved rules.

Nathan Vassar is a Principal in the Firm’s Water, Compliance and Enforcement, Litigation, and Appellate Practice Groups. If you have any questions or would like additional information related to this article or other matters, please contact Nathan at 512.322.5867 or nvassar@lglawfirm.com.