Texas Supreme Court Holds Texas Commission on Environmental Quality Definition of “Operator” Controls Over Judicial Interpretation

On February 11, 2022, the Supreme Court of Texas issued its opinion in Texas Environmental Quality et al. v. Maverick County, et al., a case that addressed the meaning of the term “operator” in the context of the application for an issuance of Texas Pollution Discharge Elimination System (TPDES) permits. Maverick County provides clarity about who must apply for a TPDES permit, particularly in the context of facilities owned by one entity but operated day-to-day by another. The decision also provides a helpful analysis of what definitions govern when a judicial interpretation differs from the language provided by an agency pursuant to its statutory authority.

Maverick County involved a coal mine owned by Dos Repúblicas Coal Partnership (DRCP). DRCP contracted out the mine’s day-to-day operation to a company called Camino Real Fuels, LLC (CRF). In 2015, DRCP applied for renewal of the TPDES permit for the coal mine; CRF did not join in that application. Maverick County and others challenged the issuance of the permit on several grounds. Among these was the claim that because the TCEQ regulations require the “owner and operator” to apply for a permit, the permit application at issue here was incomplete because only the owner (DRCP) had applied, while the operator (CRF) had not. The court of appeals agreed with the permit challengers. TCEQ’s regulations define “operator” as “[t]he person responsible for the overall operation of a facility.” Turning to a prior decision interpreting that definition (Heritage v. TCEQ), the court concluded that the word “operate” meant “personal performance.” Thus, because CRF was conducting the day-to-day operations, CRG was personally performing and was required to apply for the permit along with DRCP.

The Texas Supreme Court reversed. The court first explained that the Texas wastewater statute gave TCEQ wide latitude to define who must apply for a permit. Because TCEQ had done so, the court found that the agency’s regulation was the proper starting point, not a judicial decision interpreting that regulation. The court explained that “a judicial paraphrase of a legislatively supplied rule of decision — no matter how well-reasoned or suitable to the case then before the court — does not become the rule of decision applicable to future cases.” Turning to the definition of “operator” in the TCEQ regulations, the court noted that TCEQ’s operator definition used the phrase “overall operation of a facility,” which meant something different from “personal performance.” Here, because DRCP retained control over decisions about the plant’s operations, it qualified as both the owner and the operator. The mere fact that DRCP did not engage in operations on a day-to-day basis could not override that definition.

Not only does Maverick County provide clarity about who must apply for TPDES permits; it also provides a useful analysis of where regulatory interpretation must begin. While caselaw is helpful, the relevant statutes and regulations may compel a different result and should be a leading component of any analysis.