ACCEPTED 15-24-00132-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS No. 15-24-00132-CV 5/21/2025 4:41 PM CHRISTOPHER A. PRINE IN THE COURT OF APPEALS FOR THE CLERK FIFTEENTH JUDICIAL DISTRICT OF TEXASFILED IN 15th COURT OF APPEALS AUSTIN, TEXAS AIRW 2017-7, L.P.; 600 WESTINGHOUSE INVESTMENTS , LLC; 5/21/2025 800 PM 4:41:47 WESTINGHOUSE INVESTMENTS, LLC; TEXAS COMMISSION ON A. PRINE CHRISTOPHER Clerk ENVIRONMENTAL QUALITY; AND JONAH WATER SPECIAL UTILITY DISTRICT, Appellants, v.

CITY OF GEORGETOWN, Appellee.

BRIEF OF APPELLANT TEXAS COMMISSION ON ENVIRONMENTAL QUALITY KEN PAXTON KELLIE E. BILLINGS-RAY Attorney General of Texas Chief, Environmental Protection Division BRENT WEBSTER First Assistant Attorney General SARA J. FERRIS Assistant Attorney General RALPH MOLINA State Bar No. 50511915 Deputy First Assistant Attorney [email protected] General Office of the Attorney General AUSTIN KINGHORN Environmental Protection Division Deputy Attorney General for Civil P.O. Box 12548, MC-066 Litigation Austin, Texas 78711-2548 (512) 463-2012 | Fax: (512) 320-0911 AARON L. NIELSON Solicitor General COUNSEL FOR THE TEXAS WILLIAM F. COLE COMMISSION ON Principal Deputy Solicitor General ENVIRONMENTAL QUALITY

Oral Argument Requested

IDENTITY OF PARTIES AND COUNSEL Party Counsel Texas Commission on Aaron L. Nielson Environmental Quality Solicitor General

William F. Cole Principal Deputy Solicitor General

Kellie E. Billings-Ray Chief, Environmental Protection Division

Sara J. Ferris Assistant Attorney General [email protected]

OFFICE OF THE ATTORNEY GENERAL OF TEXAS Environmental Protection Division P.O. Box 12548, MC-066 Austin, Texas 78711-2548 (512) 463-2012 | Fax: (512) 320-0911

ii IDENTITY OF PARTIES AND COUNSEL (continued) Party Counsel City of Georgetown, TX William A. Faulk, III [email protected] Carlota Hopkins-Baul [email protected] Maris M. Chambers [email protected] SPENCER FANE, LLP 816 Congress Ave., Suite 1200 Austin, TX 78701 Patricia Erlinger Carls [email protected] LAW OFFICE OF PATRICIA ERLINGER CARLS 3100 Glenview Ave. Austin, TX 78703 iii Jonah Water John J. Carlton Special District [email protected] Kelli A. N. Carlton [email protected] Erin R. Selvera [email protected] Michael Parsons [email protected] THE CARLTON LAW FIRM, PLLC 4301 Westbank Dr., Suite B130 Austin, TX 78746-6568 AIRW 2017-7, L.P., William T. Thompson 600 Westinghouse [email protected] Investments, LLC, and 800 Westinghouse Todd Disher Investments, LLC [email protected] LEHOTSKY KELLER COHN, LLP 408 W. 11th Street, 5th Floor Austin, TX 78701 Helen S. Gilbert [email protected] BARTON BENSON JONES, PLLC 7000 N. MoPac Expwy, Suite 200 Austin, TX 78731 Edmond McCarthy [email protected] MCCARTHY & MCCARTHY, LLP 1122 Colorado St., Suite 2399 Austin, TX 78701 iv TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL..............................................ii TABLE OF CONTENTS ........................................................................... v INDEX OF AUTHORITIES ...................................................................viii RECORD REFERENCES ....................................................................... xii STATEMENT OF THE CASE ...............................................................xiii STATEMENT REGARDING ORAL ARGUMENT ............................... xiv ISSUES PRESENTED ............................................................................ xv STATEMENT OF FACTS ......................................................................... 2 I. Regulatory Background: TPDES Permitting and Water Quality in Texas .................................................................... 4 A. TCEQ Administers the EPA-approved TPDES Program in Texas. .................................................................. 5 B. Texas regionalization policy is incorporated in the TPDES permitting process. ............................................. 7 C. The Commission’s TPDES permitting includes an application review process designed to ensure compliance with the Water Code, Water Quality Standards, and State policy. ................................... 10 II. Factual Background: AIRW applied for a new TPDES permit which was granted by the Commission after a contested-case hearing. ................................ 13 STANDARD OF REVIEW....................................................................... 17 Statutory Construction .................................................................. 19 SUMMARY OF THE ARGUMENT ........................................................ 21 ARGUMENT AND AUTHORITIES ....................................................... 23 v I. The district court erred in reversing the Commission’s Order, which properly applied Texas regionalization policy and controlling law. ................................... 23 A. The Commission properly considered and applied its regionalization policy. ....................................... 23 B. Substantial evidence demonstrates the City declined to provide service. .................................................. 27 C. No formal denial from the city council is required for the Commission to determine that the permit is needed and complies with regionalization policy. ........................................................ 31 D. The Commission’s findings on costs, including consideration of economic costs, are consistent with regionalization policy and supported by record evidence. .................................................................... 33 E. The district court improperly imposed a novel legal standard not provided by statute or Commission rule. .................................................................. 35 F. The district court overlooked other Commission findings related to availability and regionalization, and substantial evidence indicates the City could not provide service even if it had agreed to do so. .............................................. 38 II. The remainder of the order is supported by substantial evidence and was issued in accordance with applicable law and policy. ..................................................... 40 A. The statutory prima facie demonstration supports the Commission’s Order granting the permit. .................................................................................. 41 B. Testimony in the record demonstrating that the permit complies with the Commission’s antidegradation policy and Water Quality vi Standards also supports the Commission’s Order. .................................................................................... 43 C. The Commission’s additional findings on the protectiveness of the permit similarly are supported by substantial evidence. ..................................... 48 the evidence that was before the Commission—reversing the agency’s decision because the court hypothesized that AIRW’s wastewater needs could have been met by obtaining services from or connecting with the City of Georgetown’s existing system. This was both legally and factually erroneous. It was plainly improper to require AIRW to obtain services from the City, as all the evidence indicated that the City’s conditional offer of service would have been prohibitively costly to AIRW’s project and otherwise prohibited by other legal requirements. AIRW’s application otherwise (and undisputedly) met all other legal requirements for a permit. As such, the Commission’s order granting the permit—which necessarily incorporated regionalization goals—was supported by the evidence and entirely reasonable. The judgment of the district court therefore should be reversed.

STATEMENT OF FACTS

This case involves a challenge to the Commission’s approval of a permit for a wastewater-treatment facility that will serve two new subdivisions being built within the extraterritorial jurisdiction (ETJ) of the City of Georgetown (the City).

This is a water-quality case involving laws and policies written and enacted to protect Texas water quality while also weighing wastewater needs and the use and enjoyment of water by people, and terrestrial and aquatic life. The Texas Commission on Environmental Quality is delegated authority through the federal Clean Water Act and the Texas Water Code to administer the Texas Pollutant Discharge Elimination System (TPDES) permitting program. It is through this administration that the Commission issued the final order being challenged here.^[1]

After a contested case hearing, the Commission issued a permit to AIR-W 2017-7, L.P. (AIRW). The permit allows AIRW to discharge treated wastewater from AIRW’s proposed wastewater treatment plant into State waters in Williamson County, Texas. The City of Georgetown (the City) sought judicial review of the Commission’s Order granting the permit.

The district court reversed the Commission’s Order, providing two bases for its judgment, both relating to the State’s regionalization policy under the Texas Water Code. First, the court found that the Commission erred in determining that AIRW’s permit complies with the regionalization policy. Second, the court found that the Commission erred in finding that AIRW was denied service from the City and in finding that interconnection to the City would cost $20 million. CR at 730-31 (City of Georgetown, Texas v. Tex. Comm’n on Envt’l Qual., No. D-1-GN- 23-001004 (261st Dist., Travis County, Dec. ^[2], 2024) (Final Judgment Reversing Order of the Texas Commission on Environmental Quality)). The Commission now appeals the district court’s judgment.

I. Regulatory Background: TPDES Permitting and Water Quality in Texas

Under section 301(a) of the federal Clean Water Act (the Act),2 a person cannot discharge a pollutant into a water of the United States except as allowed under the Act, 33 U.S.C. § 1311(a), including section 402, which establishes the framework for the National Pollutant Discharge Elimination System (NPDES). Under this system, the United States Environmental Protection Agency (EPA), and any state to which EPA has delegated its authority, can issue a permit allowing a discharge that complies with requirements designed to minimize the discharged effluent’s impact on the receiving water’s uses. 33 U.S.C. § l342(a)(l)(b), 33 U.S.C. § 1251(a)(2).

A. TCEQ Administers the EPA-approved TPDES Program in Texas.

EPA has delegated NPDES authority to the State of Texas. 63 Fed. Reg. 51164 (Sept. 24, 1998). And the Texas Legislature authorized the Commission to administer the State’s wastewater-discharge permitting program. Statutes addressing TPDES are predominantly found under chapter 26 of the Texas Water Code. Section 26.121 provides that no person may discharge wastewater into water in the State3 except as authorized by the Commission. Additionally, the Commission’s rules governing TPDES permitting include the Texas Surface Water Quality Standards (Water Quality Standards), which set out the criteria for maintaining the quality of the State’s surface waters. 30 Tex. Admin. Code ch. 307.4

The Water Quality Standards establish the Commission’s antidegradation policy, which is a tiered system for ensuring that existing uses will not be impaired and water quality will not be degraded by a proposed discharge.5 Id. § 307.5. Under Tier 1, existing uses, and water quality sufficient to protect those existing uses, must be maintained. Id. § 307.5(b)(1). Tier 1 review applies to any pollution that could cause an impairment of water quality. Id. § 307.5(c)(2)(A). If the water quality of the receiving water is higher than the quality needed to support propagation of indigenous fish, shellfish, terrestrial life, and recreation in and on the water (i.e. exceeds fishable/swimmable quality), Tier 2 review also applies. Id. § 307.5(c)(2)(B).

Under Tier 2, no regulated activities that would cause degradation of waters that exceed fishable/swimmable quality are allowed unless it can be shown that the lowering of water quality is necessary for important economic or social development. Id. § 307.5(b)(2). Degradation is defined as a lowering of water quality by more than a de minimis extent, but not to the extent that an existing use is impaired. Id. The Commission has developed guidance—the Implementation Procedures for the Texas Surface Water Quality Standards—to help the Commission in conducting antidegradation reviews in TPDES permitting. AR 129.

B. Texas regionalization policy is incorporated in the TPDES permitting process.

In addition to water-quality assessments, the Commission reviews permit applications for consistency with the State’s regionalization policy. Wastewater regionalization involves the consolidation of multiple service areas (such as subdivisions) into a larger facility or collection system within the same geographic area so that State wastewater needs can be managed more efficiently.

The Legislature has codified the encouragement of regionalization and provided the Commission with significant discretion to implement this policy—particularly in determining the "reasonable methods" to use to further regionalization. Tex. Water Code § 26.003; see also Tex. Water Code §§ 26.0282, and 26.0816 (further setting out the State’s regionalization policy).

Regionalization is addressed in wastewater permitting as part of the Commission’s consideration of need for the permitted operation:

6 Section 26.081 authorizes the Commission to establish regional areas served exclusively by designated regional entities to “implement the state policy . . . .”

In considering the issuance, amendment, or renewal of a permit to discharge waste, the [C]ommission may deny or alter the terms and conditions of the proposed permit, amendment, or renewal based on consideration of need, including the expected volume and quality of the influent and the availability of existing or proposed areawide or regional waste collection, treatment, and disposal systems not designated as such by commission order pursuant to provisions of this subchapter. . . . Tex. Water Code § 26.0282 (emphasis added).

The Commission implements Texas regionalization policy in two ways:

1) Adopting rules establishing Regional Areas—clearly defined geographic areas with designated Regional Entities who are the sole persons authorized to serve in the area. 30 Tex. Admin. Code ch. 351; see Tex. Water Code § 26.081.

2) Outside of these Regional Areas, requiring wastewater permit applicants to demonstrate that they have contacted service providers located within 3 miles of a proposed facility and inquired about the possibility of connecting for service. See Tex. Water Code § 26.0282. The second prong, or non-Regional Area implementation, involves case- by-case consideration of need and nearby service availability. It is incorporated in the Commission’s permit application instructions, and at the time the Commission considered AIRW’s permit application, the Commission’s regionalization policy was also the subject of a Commission guidance webpage entitled “TCEQ Regionalization Policy for Wastewater Treatment” (Regionalization Guidance).7 SCR-AR 98.

The Regionalization Guidance explains that the presence of a wastewater-treatment facility or collection system within three miles of the proposed facility does not compel an applicant to connect with an existing facility. SCR-AR 98 at 1. The Commission’s guidance also provides four scenarios under which “TCEQ may approve . . . applications for discharges of wastewater”: • There is no wastewater treatment facility or collection system within three miles of the proposed facility. • The applicant requested service from wastewater treatment facilities within the 3 miles, and the request was denied. • The applicant can successfully demonstrate that an exception to regionalization should be granted based on costs, affordable rates, and/or other relevant factors. • The applicant has obtained a Certificate of Convenience and Necessity (CCN) for the service area of the proposed new facility or the proposed expansion of the existing facility. SCR-AR 98 at 1-2.

C. The Commission’s TPDES permitting includes an application review process designed to ensure compliance with the Water Code, Water Quality Standards, and State policy.

Under the Texas Water Code, a person may be authorized to discharge into water in the State by applying to the Commission for a wastewater-discharge permit. Tex. Water Code § 26.027(a)–(b). The Commission rules governing the permit-application process contemplate a permit-review process with Executive Director Staff, substantive assessments, and several opportunities for public participation. See e.g.

30 Tex. Admin. Code §§ 39.551 (Notices); 50.133 (Executive Director Action on Application); 55.154 (Public Meeting); and 55.156 (Public Comment Processing).

Applicants must provide information to allow Executive Director Staff to conduct a regionalization analysis and effectuate the Commission’s policy of encouraging regionalization of wastewater services where possible, in light of other factors affecting permitting. The Commission’s application form includes a specific section relating to “Regionalization of Facilities” and requires additional information to be attached for certain responses. See SCR-AR 74 at 44-45.

Upon receipt of the application, Executive Director Staff must first ensure the application is administratively complete (i.e., contains all the required information). See 30 Tex. Admin. Code § 39.418. Once the Executive Director finds the application to be administratively complete, the applicant provides its first public notice of the application, called the Notice of Receipt of Application and Intent to Obtain a Permit. Id. § 39.551(b).

Executive Director Staff then begins a technical review of the application to determine whether it meets all applicable statutory and regulatory requirements. See id. § 39.419(a). During this process, the Executive Director may ask the applicant to provide additional information regarding the technical aspects of the project.

As a key part of its review, Executive Director Staff conducts an antidegradation review. AR 127 (ED Ex. JL-1) at 7 (“An antidegradation review is performed for all new permits and major amendment permits”); AR 84 (AIRW Ex. 14) at 10-11; see 30 Tex. Admin. Code § 307.5(b). The purpose of an antidegradation review is to ensure that the existing water quality (Tier 2) and existing uses (Tiers 1 and 2) are maintained in accordance with the Commission’s antidegradation policy (30 Tex.

Admin. Code § 307.5) and the 2010 TCEQ Procedures to Implement the Texas Surface Water Quality Standards (Implementation Procedures). See AR 129 (ED Ex. JL-3) (Implementation Procedures).

During its substantive review, the Commission also assesses “for the need and availability of regionalization for wastewater during the permitting process.” SCR-AR 98 at 1. But “[t]he presence of a wastewater treatment facility or wastewater collection system within three miles of a proposed new wastewater treatment facility or the expansion of an existing facility is not an automatic basis to deny an application or to compel an applicant to connect to an existing facility.” Id.

When the technical review has been completed, Executive Director Staff prepares a draft permit and technical summary of the application. SCR-AR 9, 10. Once the Executive Director has made a preliminary decision on the application, further notice is published and opportunity for public comment, public meeting, and requests for a contested-case hearing are provided. 30 Tex. Admin. Code §§ 39.551(c) and (f), 55.154, 55.156. If a contested-case hearing is granted, the Commission will specify the number and scope of the specific factual issues referred to the State Office of Administrative Hearings (SOAH). Id. § 55.211(b)(3)(A)(i).

After the public-comment period has closed, Executive Director Staff responds to public comments. Id. § 39.420. If the permit is ultimately granted, the response to public comment becomes part of the final Commission order: the Commission “shall consider all timely public comment in making its decision and shall either adopt the executive director's response to public comment in whole or in part or prepare a commission response.” Id. § 50.117(f).

II. Factual Background: AIRW applied for a new TPDES permit which was granted by the Commission after a contested- case hearing.

In April 2020, AIRW applied to the Commission for a new TPDES permit to construct and operate a new wastewater-treatment plant near the City in Williamson County, Texas. SCR-AR 1 (Application). The proposed plant, known as the Rockride Lane Water Resource Reclamation Facility (Facility), plans to serve two adjacent housing communities—the Mansions of Georgetown III and the Luxe Development (Mansions-Luxe Developments) consisting of a total of 880 residential units. SCR-AR 74 at 26; SCR-AR 78 at 8:14-17.

The TPDES application sought authorization to discharge treated domestic wastewater8 from the proposed Facility ultimately into the San Gabriel River. Id. at 9.

Executive Director Staff deemed the application to be administratively complete on June 19, 2020, and instructed AIRW to publish the Notice of Receipt of Application and Intent to Obtain a Permit. SCR-AR 2. Next, Executive Director Staff conducted its technical review of the Application to determine whether it met all applicable statutory and regulatory requirements. See SCR-AR 6, 8.

During this technical review, the Commission identified the existing and designated uses for each of the receiving waters of the proposed discharge. RR-AR 10 at 2. Executive Director Staff then conducted an antidegradation review, consistent with the Water Quality Standards and the Implementation Procedures, and determined that the proposed, treated discharge would not impair existing uses under Tier I or cause degradation of water quality under Tier II. Id.

After determining that the Application met the requirements for issuance of the permit, the Executive Director issued a preliminary decision and draft permit. Id. at 1; see also SCR-AR 9. Notice was published informing the public of the opportunity to submit comments and request a contested-case hearing on the Application. SCR-AR 72 at 19-20. At the close of the public comment period, the Executive Director issued its Response to Comments. SCR-AR 11.

Appellee, the City, requested a contested-case hearing on the Application. SCR-AR 19. After considering the request at an open meeting on November 21, 2021, the Commission determined that the City was an affected person and referred the matter to the State Office of Administrative Hearings for a contested-case hearing on eight issues. Id. The Executive Director participated as a party. SCR-AR 59 at 3.

Jonah Water Special Utility District (Jonah) appeared and initially participated in the administrative proceeding as a protestant to the Application. SCR-AR 22; SCR-AR 25 at 1.9 In April 2022, during the contested-case hearing process, Jonah and the developers of the housing communities to be served by the facility (the Westinghouse Entities10) entered into two Non-Standard Service Agreements (NSSAs) under which Jonah agreed to provide wastewater service to the Mansions-Luxe Developments after the permit is issued and a transfer from AIRW to Jonah is requested and approved by the Commission.11 SCR-AR 113. An evidentiary hearing on the Application was held on May 23-25, 2022. SCR-AR 66 (Order) at 1. Nine of the eleven witnesses presenting testimony addressed regionalization. See SCR-AR 78, 87, 94, 124, 131, 133, 134, 176, 177; see also SCR-AR 180-181.

A Proposal for Decision (PFD) and proposed order was ultimately issued that recommended the Commission issue the draft permit to AIRW. SCR-AR 59 at 75-76.

The Commission considered the PFD at an open meeting on November 16, 2022. SCR-AR 66 (Order) at 1. Shortly thereafter, the Commission issued its final order granting TPDES Permit No. WQ0015878001 to AIRW. Id. (Order) at 13. After exhausting administrative remedies before the Commission, the City filed this suit for judicial review of the Commission’s final order granting the permit. AIRW, the Westinghouse Entities, and Jonah all intervened in support of the permit.

STANDARD OF REVIEW

This is a suit for judicial review of a final order of the Commission following a contested-case hearing. The substantial-evidence standard of review applies. Tex. Gov’t Code § 2001.174; Tex. Water Code § 5.351. In addition, this case involves the construction of statutes within the Commission’s jurisdiction.

Under the substantial-evidence standard, the Court may reverse and remand for further proceedings an agency decision that is in violation of a constitutional or statutory provision; in excess of the agency’s statutory authority; made through unlawful procedure; affected by other error of law; not reasonably supported by substantial evidence considering the reliable and probative evidence in the record as a whole; or is otherwise arbitrary, capricious, or characterized by abuse of discretion. Id. § 2001.174(2). However, even if the Court finds error on any of these bases, the Court may only reverse the agency’s decision if the substantial rights of the appellant have been prejudiced by the error. Id.; Dyer v. Tex. Comm'n on Envtl. Quality, 646 S.W.3d 498, 514 (Tex. 2022); Tex. Comm'n on Envtl. Quality v. Maverick Cnty., 642 S.W.3d 537, 545 n.3 (Tex. 2022) (“Permit Contestants would only be entitled to relief under the APA ‘if substantial rights of the appellant have been prejudiced because’ of the error” (quoting Tex. Gov’t Code § 2001.174(2)).12 Review of an agency decision under the substantial-evidence standard is confined to the record developed before the agency and the court may not substitute its judgment for that of the agency on the weight of the evidence on questions committed to agency discretion. Tex. Gov’t Code §§ 2001.174, 2001.175(e); Maverick Cnty., 642 S.W.3d at 544. “The trial court erred by substituting its judgment in place of the Commission's decision, which was supported by substantial evidence.” Texas Comm'n on Env't Quality v. San Antonio Bay Estuarine Waterkeeper, No. 15-24- 00036-CV, at 32 (Tex. App. [15th] May 20, 2025) (Slip Op.).

In reviewing an agency’s factual findings and conclusions for substantial evidence, the issue before the court is not whether the agency reached the correct conclusions but whether there is some basis in the record for its action. Citizens Against Landfill Location v. Tex. Comm’n on Envtl. Quality, 169 S.W.3d 258, 264 (Tex. App.—Austin 2005, pet. denied).

Although substantial evidence is more than a mere scintilla, the evidence in the record may preponderate against the agency's decision and nonetheless amount to substantial evidence. Id. The Court may even disagree with the reasons given by the agency in its order and still affirm the order as long as the Court finds that a valid basis exists in the record for the action taken by the agency. R.R. Comm’n of Tex. v. City of Austin, 524 S.W.2d 262, 279 (Tex. 1975). The court presumes that the agency’s findings, inferences, conclusions, and decisions are supported by substantial evidence. Heritage on San Gabriel Homeowners Ass’n v. Tex. Comm'n on Envtl. Quality, 393 S.W.3d 417, 424 (Tex. App.—Austin 2012, pet. denied). The burden to prove otherwise is on the party challenging the agency decision. Id.

Statutory Construction

This case also involves the construction of statutes within the Commission’s jurisdiction. In construing statutes, courts first look to the plain meaning of the statute’s words, considering the context and framework of the statute as a whole. TJFA, L.P. v. Tex. Comm'n on Envtl. Quality, 632 S.W.3d 660, 667 (Tex. App.—Austin 2021, pet. denied). “We interpret statutes according to their plain language, but in context—not isolation.” State v. Hollins, 620 S.W.3d 400, 407 (Tex. 2020); see In re Dallas County, 697 S.W.3d 142, 158 (Tex. 2024).

“Where statutory text is clear, that text is determinative of legislative intent unless the plain meaning of the statute's words would produce an absurd result.” TJFA, L.P. Id. 632 S.W.3d at 667. If the statute is ambiguous, however, courts will look to the agency’s interpretation. See R.R. Comm'n of Texas v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 629 (Tex. 2011) (holding that when a statute is subject to multiple interpretations, courts uphold the enforcing agency's construction if it is reasonable and in harmony with the statute).

An agency’s interpretation is entitled to “serious consideration” when it does not conflict with the statute. State v. Pub. Util. Comm'n of Texas, 344 S.W.3d 349, 356 (Tex. 2011). “‘[W]e will generally uphold an agency's interpretation of a statute it is charged by the Legislature with enforcing, so long as the construction is reasonable and does not contradict the plain language of the statute.’” Sirius XM Radio, Inc. v. Hegar, 643 S.W.3d 402, 407 (Tex. 2022) (quoting R.R. Comm'n v. Tex. Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 625 (Tex. 2011)). Moreover, the Court should accept an agency’s interpretation even if another reasonable interpretation exists. Steering Comms. for the Cities Served by TXU Elec. v. Pub. Util. Comm’n, 42 S.W.3d 296, 300 (Tex. App.—Austin 2001, no pet.).

SUMMARY OF THE ARGUMENT

The Commission’s order should have been upheld under the substantial evidence rule, Tex. Gov’t Code § 2001.174. In reversing, the district court improperly re-weighed evidence that was before the Commission and imposed a legal standard not found in the governing law.

In granting the AIRW’s wastewater permit, the Commission reasonably and properly applied Texas regionalization policy. The record demonstrates there were significant barriers—both financial and logistical—to obtaining service from or connecting with the City’s existing system. Further, months of communications took place, but the City never wavered in its position that annexation, along with attendant changes in land use, would be required for service from the City. Nothing in the Record indicates that the City was willing to waive these requirements.

Moreover, record evidence indicates that the cost of annexation and connection to the City’s facilities would have been high, and conversely, availability of service from the City was not confirmed in the record. The planned development and the proposed treatment facility are partially within Jonah Special Utility District’s district boundaries, and the City has not obtained or sought Jonah’s consent to serve there.

Given all this, the Commission reasonably concluded that there is a need for the permit, and that its issuance is consistent with the State’s regionalization policy. The Commission ultimately determined the permit application was reasonable and supported by record evidence, and while the City may disagree with the Commission’s decision, it has not shown reversible error.

In addition to regionalization-policy considerations, the Commission’s Order is supported by substantial evidence and is consistent with applicable law in all other respects. The Commission properly concluded that the permit complies with all legal and technical standards, protects water quality, and protects the existing uses of the receiving waters and the health of nearby residents and wildlife. In reaching these conclusions, the Commission considered the record before it, weighing the evidence and assessing the credibility of the witnesses— matters which are the exclusive province of the Commission under Texas law—and determined that, based upon the record, and applying its Water Quality Standards, AIRW’s permit should be granted.

At bottom, the Commission engaged in reasoned decision-making when granting the permit and accordingly, this Court should reverse the district court’s judgment and affirm the underlying Order granting the permit.

ARGUMENT AND AUTHORITIES

I. The district court erred in reversing the Commission’s Order, which properly applied Texas regionalization policy and controlling law.

A. The Commission properly considered and applied its regionalization policy.

Exercising its discretion to consider need and availability in wastewater permitting, the Commission considered the record before it and determined there is a demonstrable need for AIRW’s permit, and the permit’s issuance is consistent with Texas regionalization policy. See SCR-AR 66 at COL 10-11; Tex. Water Code § 26.0282.

Under the Water Code, the Commission has broad discretion to determine the reasonable methods for encouraging regionalization. Tex. Water Code § 26.003. In areas of the State outside of designated regional areas, the Commission determines regionalization considerations on a case-specific basis. SCR-AR 98 at 1-2. While Texas policy promotes regionalization in general, it does not require that service must be provided from existing facilities when denial, costs, or other factors impact the availability of service through an existing facility. Tex. Water Code § 26.003; SCR-AR 98 at 1-2.

The Commission’s approval of AIRW’s TPDES permit is consistent with Texas regionalization policy. AIRW’s application and the evidence developed during the contested-case process indicated that connection with the City’s wastewater treatment system was not available and not feasible. Consistent with the Commission’s Regionalization Guidance, the record indicates: (1) AIRW requested service from wastewater treatment facilities within three miles, and its requests were denied; and (2) AIRW demonstrated that an exception to regionalization should be granted based on costs and other considerations. SCR-AR 59 (PFD) at 21- 22, 47; SCR-AR 98 at 2; see SCR-AR 66 at FOF 40-46, 51-52. Nothing more was required.

AIRW’s application—which is part of the evidentiary record— complied with permitting requirements, providing required information including a map of nearby wastewater-treatment facilities and email communications between AIRW and the cities of Georgetown and Round Rock discussing the respective cities’ abilities to provide wastewater services to the development. SCR-AR 74 at 75-79. In response to a request from Executive Director Staff, AIRW provided additional information in the form of two letters explaining the justification for the Facility and cost estimates related to annexation and connection to the City’s facilities. Id. at 103-08.

Beyond that, the Commission’s Order issuing the permit is not based on the application alone—it is based on the full administrative record developed through the contested-case hearing. Tex. Gov’t Code § 2003.047(m). Nine witnesses presented testimony on the issue of regionalization.13 After considering the witnesses’ testimony and the entire evidentiary record, as well as arguments of the parties, the Proposal for Decision recommended that the Commission issue the draft permit to AIRW. The Commission followed this proposal and granted the permit. SCR-AR 59 at 75-76; SCR-AR 66.

While the Commission did not accept every argument made by AIRW, it was not required to. The Commission determined the applicant had met its burden of proving that issuing the permit is consistent with the State’s regionalization policy. See SCR-AR 66 at FOF 33-52. Specifically, the Commission found that, due to approximately $20 million in costs related to annexation-related diminution in property value, “[c]osts weigh in favor of granting AIRW's application.” Id. at FOFs 45-46. The Commission determined the City had effectively denied AIRW's request for service. Id. at FOF 42.

The Commission’s Order, finding that there is a need for the proposed facility and that issuance of AIRW’s permit is consistent with the State’s regionalization policy, is supported by substantial evidence in the record, is consistent with applicable law, and is the product of reasoned decision-making.

B. Substantial evidence demonstrates the City declined to provide service.

The City effectively denied service to AIRW by conditioning it on annexation and significant land-use restrictions. While the City argues that it did not refuse to serve AIRW because it could possibly later waive its annexation prerequisite, this assertion is belied by the City’s written correspondence providing precisely the opposite. See e.g., SCR-AR 74 (AIRW Ex. ^[4]) at 77.14

The record demonstrates that, in communications in July 2019 with the developer of the project that will be served by AIRW’s permit, the City stated that using City wastewater services would require voluntary annexation and involve zoning considerations. 15 SCR-AR 100 at 1. Likewise, communications with the Assistant City

14 See also SCR-AR 59 (PFD) at 39-40.

15 Georgetown’s development code requires annexation. “Properties in the ETJ that desire or require wastewater service from the City of Georgetown shall first submit a petition for voluntary annexation, in accordance with Section 3.25 of this Code.” Georgetown, Tex., Unified Dev. Code § 13.05 (emphasis added); see id. at § 1.01 (“The word ‘shall’ is mandatory.”).

Manager, Wayne Reed, reiterate that position. In a February 2020 email, Mr. Reed cited generally to the City’s code requiring voluntary annexation for connecting to the City’s wastewater system and referenced the City Planner’s confirmation “that we do not support a delayed annexation approach.” SCR-AR 103 at 1; see SCR-AR 74 at

77 (June 2020 email from City Planner).

Further, a May 2020 email from Mr. Reed demonstrates that AIRW continued to engage with the City on the possibility of service, but the City’s position remained unchanged:

In addition, nothing Wes said on our call yesterday should have been construed as the City entertaining providing wastewater service to this project in the ETJ. We have had multiple meetings and communications with Matt Hiles on this topic, have explained our position in detail, and there is no need to revisit this request as the City’s position remains the same; annexation will be required in order to receive wastewater service from the City. SCR-AR 101 at 1.

Record evidence presented by the City itself also demonstrates the City’s position that annexation was required for service, and that the City was not interested in AIRW’s alternative proposals. See SCR-AR 131 at 12. (GT Ex. ^[1], Reed Prefiled Direct Testimony).

In support of its regionalization determinations during permit review, Executive Director Staff offered the testimony of Mr. Gordon Cooper, the Commission permit reviewer who conducted the Commission’s regionalization review on AIRW’s permit application. 16 SCR-AR 124 (ED Ex. GC-1) at pdf 3-5. Mr. Cooper stated that issuance of the permit is consistent with the state’s regionalization policy. Id. at pdf 12, 15.

Mr. Cooper further testified that AIRW provided communications with two nearby providers showing that it was unable to reach an agreement for service. See SCR-AR 124 (ED Ex. GC-1) at pdf 9. At the hearing, Mr. Cooper testified regarding an additional email from the City that stated annexation would be required if AIRW desired to connect to the City's wastewater system. SCR-AR 181 (Hearing Tr.) at 641; SCR-AR

74 (AIRW Ex. ^[4]) at 77. Mr. Cooper explained the Commission looks for whether communication and negotiations took place, and here, AIRW and the City were unable to reach an agreement. The City placed a condition on supplying service—annexation. SCR-AR 124 (ED Ex. GC-1) at pdf 7-8. Mr. Cooper further testified that the City's

16 Mr. Cooper has worked on over 195 wastewater applications. SCR-AR 124 at pdf 2.

conditional requirement that AIRW accept annexation in order to receive service was a denial of service. SCR-AR 181 (Hearing Tr.) at 637-42.

Ultimately, the Commission was unpersuaded by the City’s argument that the permit should be denied because it was technically possible that city council ultimately would waive the annexation prerequisite for service. See SCR-AR 66 (Order) at FOF 41-42, COL 10-11. A possibility is not a fact, and it is not in record evidence here.

The Commission’s finding of fact 42 states: “AIRW received a conditional offer for sewer service from the City. The City denied AIRW's request for service unless AIRW agreed to annexation and land use restrictions.” SCR-AR 66. The Commission also found that there was “no evidence that the City was willing to waive the annexation and land use requirements.” And, contrary to the district court’s statement that “there is no way to know” if the City would be willing to waive the annexation requirement, record evidence demonstrates the City’s unwavering insistence on annexation with its attendant land-use restrictions as a prerequisite for service. See SCR-AR 74 at 77; SCR-AR 100; SCR-AR 101; SCR-AR 103.

C. No formal denial from the city council is required for the Commission to determine that the permit is needed and complies with regionalization policy.

The Commission’s assessment of the City’s response to AIRW also comports with a recent Texas Supreme Court pronouncement that a refusal does not require formalities—it can be shown through action, or inaction when action is called for. Morath v. Lampasas Indep. Sch. Dist., - 686 S.W.3d 725, 735 & n. 30 (Tex. 2024), reh'g denied (Apr. 19, 2024).

Even more recently, the Supreme Court recognized that actions and positions taken by a city can indicate a final decision has been made, even without a formal determination. The Commons of Lake Houston, Ltd. v. City of Houston, No. 23-0474, 2025 WL 876710, at[*10] (Tex. Mar. 21, 2025). Therein, the Court addressed ripeness in the context of an inverse-condemnation claim brought by the Commons after the City of Houston passed a floodplain ordinance raising required elevations for structures where The Commons was planning to build. Id. at *1-2.

The City of Houston filed a plea to the jurisdiction, arguing that the claims were unripe because the city had not made a final decision on a permit or application. Id. at *2. The Commons argued that its claims were ripe under the futility doctrine. See id. at[*10] (citing Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 929-32 (Tex. 1998) (“The Town clearly was not going to approve the Mayhews’ development proposal for 3,600 units, making a subsequent application or variance request for 3,600 units a futile act.”)).

The Court concluded that the city’s assertion indicated the finality of the city’s decision (and a rejection of the Common’s request) and thus held that The Commons’s takings claims were ripe. Id. at[*10] -11.

What’s more, the district court’s insistence on formalistic protocol in the interchange between AIRW and the City loses sight of the fact that the approval under judicial review is the Commission’s—not the City’s. Nothing in the Water Code requires the City’s approval or formal decision on any matter at any stage of the process relevant to this case.17 Unlike in takings claim cases such as The Commons of Lake Houston, the City is not the regulator making the final determination on the permit at issue. Instead, the Commission determines whether to grant a TPDES permit and whether AIRW’s application is consistent with regionalization.

The “final and authoritative determination”18 on the TPDES permit should turn on the Commission’s decision—just as the Legislature envisioned. The determination should not be constructively hijacked by a municipality seeking to control how land outside its boundaries is used by forcing annexation or a futile exercise of going through approval processes for waivers that the City has given no indication would ever be granted.19 Tex. Water Code §§ 5.122, 26.027; SCR-AR 66 at FOF 40-41, COL 1 and 10-11.

D. The Commission’s findings on costs, including consideration of economic costs, are consistent with regionalization policy and supported by record evidence.

Substantial evidence demonstrates that cost considerations support the Commission’s finding of need and permit issuance. Mr. Cooper testified that AIRW provided financial information about the costs to link to the City's wastewater facility, and the information AIRW provided satisfied the requirement to provide an analysis of expenditures for connecting to an adjacent collection system. SCR- AR 124 (ED Ex. GC-1) at 8. Mr. Cooper stated that applicants like AIRW are not required to accept a nearby facility's terms if the terms outweigh the costs of a new facility. Id.

Additionally, AIRW witness David Tuckfield testified that the “great disparity” between the cost of building the plant versus the costs that arise from connecting to the City justify concluding that connection should not be required. SCR-AR 94 (AIRW Ex. 24) at pdf 25-26. Mr. Tuckfield discussed each of several other evidentiary exhibits in the record related to costs, including: • AIRW Ex. 37: Letter to Executive Director stating annexation will “reduce the value of the applicant’s developed project by over $20 million” (SCR-AR 107) • AIRW Ex. 38: Letter to Executive Director stating annexation requirement for connection to the City’s system “affects the value of the project by 22.222 to 25 times the annual property tax amount” (SCR-AR 108) • AIRW Ex. 23: Appraisal concluding lost value to the project to be $20 million due to annexation (SCR-AR 93) • AIRW’s Exs. 21 and 22: AIRW’s cost analysis (SCR-AR 91 and 92). AR 94 (AIRW Ex. 24) at pdf 25-26.

After finding that the cost of connecting to the City’s system is lower than the cost to construct, but that “the City's condition of annexation to connect to its system . . . carries with it an approximately $20 million cost due to diminution in property value,” the Commission found that “[c]osts weigh in favor of granting AIRW's application.” SCR-AR 66 (Order) at FOFs 44-46.

The Commission’s finding is a proper exercise of its authority under the Water Code. See Tex. Water Code §§ 26.003 (discretion to determine and use "reasonable methods" to further regionalization) and 26.0282 (discretion to consider need in regionalization context). The Commission acted reasonably in exercising its discretion, consistent with its guidance document, to allow for a more expansive review of regionalization and need. See AR 98 (GT Ex. 15) at 2; AR 147 (AIRW Ex. 28) at 2 (stating that an applicant can satisfy regionalization concerns “based on costs, affordable rates, or other relevant factors”).

E. The district court improperly imposed a novel legal standard not provided by statute or Commission rule.

The district court’s judgment, stating that the Commission “should not have determined” that the City denied AIRW service or that the connection would have cost $20 million, applies requirements not found in the Texas Water Code. See Tex. Water Code §§ 26.003, 26.0282, 26.081. Approval of a permit consistent with Texas regionalization policy does not require that a nearby provider deny service; nor does it require that an applicant first exhaust all possible municipal avenues before the Commission may approve the permit. Id.; SCR-AR at 1-2. When the Commission reviews an application and considers need and regionalization policy, the Commission takes many things into account, including whether nearby providers have denied service, and the cost of connection. SCR-AR 98 at 2. However, under the guidance provided on the Commission’s website, excessive costs are a separate scenario than denial for purposes of determining consistency with regionalization policy. SCR-AR 98 at 2.

The Regionalization Guidance provides four independent scenarios illustrating that the Commission can approve applications, including when there is another wastewater-treatment facility or collection system nearby. SCR-AR 98 at 1-2. The guidance lists the scenario that service is requested from a facility within three miles, but the request is denied, and also lists a scenario in which the applicant can successfully demonstrate that an exception to regionalization should be granted for other reasons. Id. at 2. In this latter scenario, the Commission reserves its discretion to consider “costs, affordable rates, and/or other relevant factors.” This is precisely what the Commission did in its Order. See SCR- AR 66 at FOF 40-52.

The district court found both that a denial of service cannot be obtained without first receiving a formal denial of an annexation waiver request, and that the Commission could not consider costs arising from complying with the City’s requirements for service (i.e. annexation and land use restrictions). By doing so, the district court collapsed two independent concepts (denial of service, exception for costs related to service on City’s terms, and other factors) that the Commission has expressly, independently, recognized as consistent with regionalization policy. By stating that the Commission can neither consider the request for service from the City to be denied, nor consider the costs that would be incurred to meet the City’s required conditions for service connection, the district court creates a catch-22 scenario that disables the applicant— and the Commission—from moving forward with a TPDES permit application without the nearby local governmental entity’s city council first formally acting. This is neither required nor contemplated in the Texas Water Code’s regionalization policy provisions. See Tex. Water Code §§ 26.003, 26.0282, 26.081. The district court erred by imposing standards contrary to applicable law, thereby infringing upon the Commission’s legislatively authorized discretion.

F. The district court overlooked other Commission findings related to availability and regionalization, and substantial evidence indicates the City could not provide service even if it had agreed to do so.

In addition to finding that there was no evidence presented that the City would consider an annexation waiver, the Commission’s Order included findings that weigh against the notion of service availability from the City. The Commission found the Facility and its associated development are partially within Jonah’s Special Utility District (SUD) boundaries. SCR-AR 78 (AIRW-Ex. 8). The Commission’s Order included these findings:

49. There is no regional provider designated for the area where the Facility is proposed to be located.

50. The proposed Facility and its discharge are not within the sewer CCN of any retail public utility.

51. The proposed Facility and its discharge are partially within Jonah's district boundaries and wholly within Jonah's water CCN area.

52. The City did not request Jonah's consent to provide wastewater service to the Facility, and Jonah has not given consent for the City to operate within its boundaries. SCR-AR 66 (Order) at FOF 49-52; see Id. at FOF 34-42. The district court’s determination that a formal “no” was required from the City’s city council (on either annexation and land-use waiver or on service) fails to account for the fact that the record does not demonstrate service availability from the City.

The City indisputably does not have either a wastewater Certificate of Convenience and Necessity (CCN) or Jonah’s consent to provide wastewater services within its SUD boundaries. SCR-AR 94 (AIRW Ex. 24) at 31. There is no record evidence demonstrating the contrary. By statute, “[e]xcept as otherwise provided . . . a retail public utility may not provide retail water or sewer utility service within the boundaries of a district that provides the same type of retail water or sewer utility service without the district’s consent, unless the retail public utility has a CCN to provide retail water or sewer utility service to that area.” 16 Tex. Admin. Code § 24.225(c). Given that Jonah does not consent to the City serving within its boundaries, the City would be prohibited from serving the property proposed to be served by AIRW’s facility, even if the City was willing to waive other barriers to connection. See SCR-AR 66 at FOF 52; SCR-AR 94 (AIRW Ex. 24) at pdf 32; See also SCR-AR 59 (PFD) at 29-30.

Applying the evidence presented to the applicable provisions of the Water Code, the Commission reasonably concluded that the “Application demonstrates a need for the [permit]” and “demonstrates compliance with TCEQ's regionalization policy.” SCR-AR 66 (Order) at COLs 10-11.

II. The remainder of the order is supported by substantial evidence and was issued in accordance with applicable law and policy.

In addition to complying with Texas regionalization policy,20 the Commission’s Order is otherwise supported by substantial evidence, considering the reliable and probative evidence in the Record as a whole.21 This includes the Commission’s determination that the permit will protect and maintain the existing water quality and uses, including protecting aquatic and terrestrial wildlife, as is required by the Commission’s water-quality rules and antidegradation policy. SCR-AR 66 at COL 8-9, 12-14, 16; see 30 Tex. Admin. Code ch. 307.

A. The statutory prima facie demonstration supports the Commission’s Order granting the permit.

As an initial matter, under the Texas Government Code, certain information, when filed at the State Office of Administrative Hearings and entered into the evidentiary record, constitutes a prima facie demonstration that “all state and federal legal and technical requirements” are met “and a permit, if issued consistent with the draft permit, would protect human health and safety, the environment, and physical property.” Tex. Gov’t Code § 2003.047(i-1). This demonstration was made in the Commission proceeding at issue: “The Application, the Draft Permit, and the other materials listed in Texas Government Code section 2003.047(i-l), which are collectively referred to as the prima facie demonstration, were offered and admitted into the record at the preliminary hearing.” SCR-AR 59 (PFD) at 7; see SCR-AR 25 (Order No. 1) at 1; SCR-AR 71-77 (AIRW Exs. 1-7); see also SCR-AR 66 (Order) at FOF 23.

The Government Code also provides an opportunity for parties to rebut the prima facie demonstration through controverting evidence and allows the applicant and the Executive Director to provide additional information to support the draft permit. Tex. Gov’t Code § 2003.047(i-2), (i-3). However, the City did not provide credible evidence that the draft permit does not comply with applicable requirements. As the Proposal For Decision explains:

The City failed to rebut the prima facie determination because its arguments were conclusory and unverifiable due to a lack of underlying data to support its conclusions. The City alleged that the Application lacked information regarding the receiving streams and existing and known future uses and that TCEQ's review of the Application was incorrect; however, the ALJs find that the City's allegations are not supported by any credible evidence. The City did not present evidence disputing the accuracy of the [Aquatic Life Use], [dissolved oxygen] determinations, or effluent limits or how such determinations and limits are not protective of existing uses and wildlife. SCR-AR 59 (Proposal For Decision) at 19 (pdf 24). Using the standards found in Texas Government Code sections 2003.047(i-1)-(i-3), the Commission properly concluded that the City did not rebut the prima facie demonstration by showing that one or more provisions in the permit violate a specifically applicable state or federal requirement that relates to a matter referred for contested-case hearing by the Commission. SCR- AR 66 (Order) at COL 7. By finding that the prima facie demonstration was unrebutted, the Commission determined that AIRW had satisfied its burden to demonstrate that all state and federal legal and technical requirements for the permit were met and that the permit would be protective of human health and safety, the environment, and physical property. See Tex. Gov’t Code § 2003.047(i-1). The evidence comprising the prima facie demonstration is “part of the reliable and probative record as a whole” and under Texas Government Code section 2001.174 serves as substantial evidence supporting the Order.

B. Testimony in the record demonstrating that the permit complies with the Commission’s antidegradation policy and Water Quality Standards also supports the Commission’s Order.

In addition to the prima facie demonstration admitted into the record (SCR-AR 71-77), expert testimony also supported the permit, including aquatic scientist Jenna Lueg who testified that the permit would maintain and protect existing uses, will not harm aquatic or terrestrial wildlife, and does not violate the Commission’s antidegradation policy. SCR-AR 127 (ED Ex. JL-1) at 10; see 30 Tex. Admin. Code § 307.5(b)(antidegradation policy).

Executive Director Staff conducts antidegradation reviews for new TPDES permit applications like AIRW’s to ensure that the existing water quality and existing uses are maintained in accordance with the Commission’s antidegradation policy (30 Tex. Admin. Code § 307.5) and its Implementation Procedures. Record evidence shows that Executive Director Staff did so in this case. SCR-AR 127 (ED Ex. JL-1) at 7; SCR- AR 84 (AIRW Ex. 14) at 10-11; see SCR-AR 129 (ED Ex. JL-3) (Implementation Procedures).

Following the procedures set forth in the Implementation Procedures, Ms. Lueg testified that she performed both a Tier 1 and a Tier 2 antidegradation review for the proposed discharge in the same manner as she has completed prior permit reviews. SCR-AR 127 (ED Ex. J-1) at 7, 8, 10, 12. As a result of her review, Ms. Lueg concluded that the permit would satisfy Tier 1’s requirements because existing uses will not be impaired and that numerical and narrative criteria to protect existing uses will be maintained. Id. at 8.

Executive Director witness James Michalk used Ms. Lueg’s adjustments when modelling the proposed discharge and found that the effluent limits listed in his modelling memo would be adequate to ensure dissolved oxygen levels would be maintained above the appropriate criteria for the entire length of the discharge route. SCR-AR 73 (AIRW Ex. ^[3]) at pdf 45 (modelling memo). In turn, Executive Director witness Mr. Cooper took Mr. Michalk's effluent limits and incorporated them into the Draft Permit. SCR-AR 73 (AIRW Ex.^[3]) at pdf 3 (draft permit); compare Id. at 45 (modelling memo).

Executive Director Staff’s review also considered impact on aquatic life and terrestrial life such as livestock; these considerations were directly addressed in the Executive Director’s response to public comments and confirmed in comment 6 that the controlling standard was followed. SCR-AR 111 (AIRW Ex. 41) (ED’s Response to Comments) at 10. Further. the Executive Director’s Comment also confirmed that operations following the permit limitations will be safe for terrestrial and aquatic life. Id. at 10-11.

Ms. Lueg also conducted a Tier 2 review of Mankins Branch—which has been identified as having high aquatic life use—and determined that no significant degradation22 of water quality is expected. Id. at 8-9, 10,

12. Ms. Lueg explained that “[a] Tier 2 review ensures that no activities subject to regulatory action causing degradation of waters that exceed fishable/swimmable quality are allowed unless it can be shown to the commissioner’s satisfaction that the lowering of water quality is necessary for important economic or social development.” SCR-AR 127 (ED Ex. JL-1) at 6; see 30 Tex. Admin. Code § 307.5(b)(2).

“As part of the Tier 2 review, Ms. Lueg performed a nutrient screening and recommended a total phosphorus (TP) limit of 0.5 mg/L to prevent degradation and excessive growth of algae and other aquatic vegetation because Mankins Branch has a concern for nitrate and TP.” SCR-AR 59 (PFD) (citing SCR-AR 130 (ED Ex. JL-4) at 8-9). Ms. Lueg's nutrient screening was conducted in accordance with the Implementation Procedures and is organized with direct citation to the pertinent Implementation Procedures pages. See SCR-AR 130 (ED Ex. JL-4).

The Commission evaluates applications for new or expanding domestic discharges to reservoirs, streams, and rivers to determine if an effluent limit is needed for total phosphorus to prevent violation of numerical nutrient criteria and/or preclude excessive growth of aquatic vegetation. SCR-AR 127 (ED Ex. JL-1) at 8-9. Correspondingly, Ms. Lueg’s nutrient screening included the proposed discharge flow rates, instream dilution, substrate type, depth, stream type, shading, impoundments, water clarity, sensitivity to growth of aquatic vegetation, existing water quality concerns and impairments, and consistency with other permits in the area. Id. As a result of her nutrient screening and Tier 2 review, Ms. Lueg’s recommended that a total phosphorus effluent limit of 0.5 mg/L be added to the permit. Id. at 9; SCR-AR 66 (Order and Permit) at pdf 19.

In addition to Ms. Lueg’s review and testimony, Mr. Gordon Cooper testified that the permit requires testing for total suspended solids, ammonia nitrogen, total phosphorus, E. coli, and BOD,23 with testing frequencies determined by rule in section 319.9(a), which sets out appropriate monitoring requirements for this type of facility. 30 Tex. Admin. Code § 319.9(a), Table 1; SCR-AR 124 (ED Ex. GC-1) at 10; SCR- AR 181 (Tr.) at 670.

Mr. Cooper further testified that the AIRW draft permit complies with all applicable TCEQ rules and regulations, and therefore is protective of water quality. SCR-AR 124 (ED Ex. GC-1) at 13.

Put simply, the permit requirements, including monitoring and testing frequency, are designed to ensure that the discharged treated water “‘will not be toxic to man from ingestion of water, consumption of

23 Biochemical Oxygen Demand.

aquatic organisms, or contact with the skin, or to terrestrial or aquatic life.’” Id. (citing 30 Tex. Admin. Code § 307.4(d)). The antidegradation evidence in the record more than clears the substantial-evidence standard. The Commission’s antidegradation determination should be upheld. See SCR-AR 66 (Order) at FOFs 26-32, 55-61, 65-70, 74-75. COLs 4-9, 12, 14, 16.

C. The Commission’s additional findings on the protectiveness of the permit similarly are supported by substantial evidence.

There is substantial evidence in the record to support all of the Commission’s findings and conclusions with respect to the protectiveness of the permit, including the agency’s findings that the permit complies will all nuisance-odors requirements (FOFs 66-67, COL 12), has sufficient operational requirements, (FOFs 74-75, COL 15-16, see FOFs 71-73) and will be protective of human health, (FOFs 55-59, COL 9). SCR- AR 66 (Order). The City failed to meet its burden of demonstrating otherwise. See Heritage on San Gabriel, 393 S.W.3d at 424.

water, such as interference with its use. See Tex. Water Code § 26.030(a). Commission rules require abating and controlling nuisance odors and provide applicants three options for siting wastewater-treatment units for this purpose. 30 Tex. Admin. Code § 309.13(e). One of those options is ownership of a buffer zone of at least 150 feet between wastewater- treatment plant units and the nearest property line. Id. § 309.13(e)(1). To satisfy this option, the applicant must hold legal title or have other sufficient property interest to a contiguous tract of land necessary to meet the distance requirement. Id.

AIRW’s application establishes ownership of a 150-foot buffer zone from all wastewater-treatment units24 at the site. SCR-AR 74 at pdf 16,

70. The application includes a map of the property showing the location of the treatment plant units in relation to the property line. SCR-AR 74 at pdf 70. This map confirms that all units will be located at least 150 feet from the property line in all directions. Id.

In addition, testimony from two different witnesses further showed satisfaction of the 150-foot buffer zone requirement. AIRW’s Professional Engineer, Mark Perkins, testified that “[t]here will be a 150-foot buffer between the treatment units and the nearest property line” and that “ample space is available [at the property] to accommodate all major treatment units within the 150-foot buffer provided.” SCR-AR 180 at 452:10-14; SCR-AR 87 at 7:13-16; see also SCR-AR 180 at 452:13-14. Executive Director Staff witness Gordon Cooper also reviewed the permit and testified that the draft permit adequately addresses nuisance-odor requirements, including compliance with the 150-foot buffer-zone requirements. SCR-AR 124 at 11:5-11. This record evidence, separately and collectively, supports the Commission’s findings and conclusions that AIRW’s proposed wastewater-treatment plant complies with the applicable nuisance-odor requirements.

Further addressing nuisance-odor requirements, the Commission also found that “evidence failed to show that the discharge will go into any body of water that crosses or abuts any park, playground, or schoolyard within one mile of the point of discharge.” SCR-AR 66 at FOF

61. Supporting the Commission’s finding, record evidence shows that there are no parks, playgrounds, or schools on the Patterson Ranch property at issue. SCR-AR 180 (Tr.) at 417-18.

the Water Quality Standards, which require that the receiving “surface waters must not be toxic to man from ingestion of water, consumption of aquatic organisms, or contact with the skin, or to terrestrial or aquatic life.” 30 Tex. Admin. Code § 307.4(d); SCR-AR 127 (ED Ex. JL-1) at 11.

The draft permit’s terms ensure that the proposed discharge will not: 1) result in instream toxicity; 2) cause a violation of an applicable narrative or numerical standard; 3) result in the endangerment of a drinking-water supply, or 4) result in aquatic bioaccumulation that may threaten human health. Id. at 11; see SCR-AR 73 (AIRW Ex. 3- AR Tab C) at pdf 2-35 (Draft Permit). As Ms. Lueg stated, the draft permit resulting from ED Staff’s review is protective of human health of nearby residents. SCR-AR 127 (ED Ex. JL-1) at 11.

Moreover, substantial evidence supports the Commission’s finding that operational requirements in the permit are sufficient to ensure continued protection of water quality. SCR-AR 66 at FOFs 74-

75. In addition to the statutory prima facie demonstration, AIRW witness Mr. Price addressed protections related to E. coli. SCR-AR 84 (AIRW Ex. 14). Mr. Price testified that the chlorine residual in the effluent (discharge) is to be maintained between 1.0 and 4.0 mg/L and will be sampled and reported five times per week, and therefore, the effluent will be free of significant numbers of pathogens and more frequent sampling for E. coli is unnecessary. SCR-AR 84 (AIRW Ex. 14) at pdf 15.

Similarly, Executive Director Witness Mr. Cooper testified that the sampling provided for by Table 1 in the Water Quality Standards is the appropriate frequency and method of sampling for facilities with a flow of 0.2 MGD, as proposed in this case. Id. at 48; AR 181 (Tr.) at 670. Mr. Cooper explained that testing frequencies for pollutants limited in the permit are standardized—based on both the design capacity of the treatment facility and on section 319.9(a) of the Commission’s rules. SCR-AR 124 (ED Ex. GC-1) at pdf 10; see 30 Tex. Admin. Code § 319.9.

The Administrative Law Judges had all this evidence before them and noted that it established that the draft permit would maintain and protect human health, “even given a hypothetical relating to viral pathogens causing illness.” SCR-AR 59 (PFD) at 47; see Id. at 49. The Commission had the benefit of all of this evidence in reaching its final determination.

PRAYER

For these reasons, the Texas Commission on Environmental Quality respectfully prays that this Court reverse the district court’s judgment and render judgment affirming the Commission’s Order in all respects. The Commission further prays for such other and further relief to which it may be entitled. Respectfully submitted, KEN PAXTON KELLIE E. BILLINGS-RAY Attorney General of Texas Chief, Environmental Protection Division BRENT WEBSTER First Assistant Attorney General /s/ Sara J. Ferris SARA J. FERRIS RALPH MOLINA Assistant Attorney General Deputy First Assistant Attorney State Bar No. 50511915 General [email protected] AUSTIN KINGHORN OFFICE OF THE ATTORNEY Deputy Attorney General for Civil GENERAL OF TEXAS Litigation P.O. Box 12548 (MC-066) Austin, Texas 78711-2548 AARON L. NIELSON (512) 463-2012 Solicitor General (512) 320-0911 (Fax) WILLIAM F. COLE Attorneys for Texas Commission Principal Deputy Solicitor General on Environmental Quality

CERTIFICATE OF COMPLIANCE

I certify that Brief of Appellant, Texas Commission on Environmental Quality contains 10,323 words and therefore complies with the word limit found in Tex. R. App. P. 9.4(i)(2)(B).

/s/ Sara J. Ferris SARA J. FERRIS Todd Disher [email protected] LEHOTSKY KELLER COHN, LLP 408 W. 11th Street, 5th Floor Austin, TX 78701 Helen S. Gilbert [email protected] BARTON BENSON JONES, PLLC 7000 N. MoPac Expwy, Suite 200 Austin, TX 78731 Edmond McCarthy [email protected] MCCARTHY & MCCARTHY, LLP 1122 Colorado St., Suite 2399 Austin, TX 78701 Attorneys for AIRW 2017-7, L.P., 600 Westinghouse Investments, LLC, And 800 Westinghouse Investments, LLC

/s/ Sara J. Ferris SARA J. FERRIS APPENDIX TO BRIEF OF APPELLANT TEXAS COMMISSION ON ENVIRONMENTAL QUALITY Appendix Description Record Item Citation

1 District Court Final Judgment CR 730-32

AR 66 at 2 Commission’s Final Order and Permit 5-52

•Texas Commission on Environmental AR 66 at Quality’s Order (Nov. 28, 2022) 5-17

•AIRW’s TPDES Permit No. WQ0015878001 AR 66 at (Issued Nov. 28, 2022) 18-52

Executive Director’s Response to Public 3 AR 111 Comment

4 Texas Government Code Provisions

•Tex. Gov’t Code §§ 2001.174, 2001.175, •Tex. Gov’t Code § 2003.047

Texas Water Code – Regionalization 5 Provisions

• Tex. Water Code §§ 26.003, 26.0282, 26.081

6 Texas Water Code – Other Provisions

• Tex. Water Code §§ 5.122, 5.351

•Tex. Water Code §§ 26.027, 26.030

7 Texas Administrative Code Provisions

•16 Tex. Admin. Code § 24.225

•30 Tex. Admin. Code § 80.17

•30 Tex. Admin. Code §§ 307.4, 307.5

•30 Tex. Admin. Code §§ 309.11, 309.13

•30 Tex. Admin. Code § 319.9

Georgetown Unified Development Code 8 Provisions

•Uniform Development Code §§ 1.01, 13.05

TCEQ Regionalization Guidance 9 AR 98 Webpage

Appendix Item 1 District Court Final Judgment

12/02/2024 11:50:08 AM Velva L. Price District Clerk Travis County D-1-GN-23-001004

CAUSE NO. D-1-GN-23-001004 CITY OF GEORGETOWN, TEXAS § IN THE DISTRICT COURT OF § Plaintiff, § § vs. § § TRAVIS COUNTY, TEXAS TEXAS COMMISSION ON § ENVIRONMENTAL QUALITY, § § Defendant. § 261ST JUDICIAL DISTRICT

FINAL JUDGMENT REVERSING ORDER OF TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

This case is an appeal of a final agency order relating to the issuance by the Texas Commission on Environmental Quality (“TCEQ”) to Intervenor AIRW 2017-7, L.P. (“AIRW”) of a new Texas Pollutant Discharge Elimination System permit (the “Permit”) to discharge up to 200,000 gallons per day of treated domestic wastewater from a proposed wastewater treatment facility within the extraterritorial jurisdiction of the plaintiff, City of Georgetown (“City” or “Plaintiff”). On October 31, 2024, this Court held a hearing on the merits of this cause. Having considered the Texas Administrative Procedure Act, pleadings, administrative record, briefing, and argument of counsel, the Court finds that the TCEQ’s order under review in this case should be and is hereby REVERSED AND REMANDED to Defendant for further proceedings for the following reasons:

1. Defendant erred by determining that the Permit complies with Texas’s regionalization policy.

2. Because Intervenor AIRW failed to seek a waiver from Plaintiff’s city council, there is no way to know whether the city council would be willing to waive the annexation requirement. It is unreasonable to assume that City staff—who are bound by the city council—speak for the city council, which is not bound and has both the power to waive requirements and the ability to act under political

considerations. This means that Defendant should not have determined both that (1) Plaintiff denied Intervenor AIRW service; and (2) connection to Plaintiff’s system would cost Intervenor AIRW $20 million.

IT IS ORDERED, ADJUDGED, AND DECREED that TCEQ’s order is REVERSED AND REMANDED TO THE TCEQ FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS ORDER.

This Judgment is final, disposes of all parties and claims, and is appealable. SIGNED this __ of November, 2024. Date:_____________________ December 2, 2024

__________________________________ JUDGE PRESIDING LAURIE EISERLOH 455th District Court AGREED AS TO FORM: Appendix Item 2 Commission’s Final Order and Permit

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 12. The effluent limitations in the Draft Pennit, based on a 30 day average, include: 7 milligram per liter (mg/L) Five-Day Carbonaceous Biochemical Oxygen Demand; 10 mg/L Total Suspended Solids; 2 mg/L Ammonia Nitrogen; 0.5 mg/L Total Phosphorus; a minimum dissolved oxygen (DO) of 4.0 mg/L, pH in the range of 6.0 to 9.0, and Escherichia coli (E. coli) not to exceed 126 colony forming units/most probable number per 100 milliliter. 13. The effluent shall contain a chlorine residual of at least 1.0 mg/Land shall not exceed a chlorine residual of 4.0 mg/L after a detention of at least 20 minutes based on peak flow. Notice and Jurisdiction 14. The Notice of Receipt of the Application and Intent to Obtain Water Quality Permit was published on June 28, 2020, in the Wilbamson County Sun in English an~ on June 25, 2020, in El Mundo Newspaper in Spanish. 15. The Combined Notice of Receipt and Intent to Obtain a Water Quality Permit and Notice of Application and Preliminary Decision was published on December 13, 2020, in the Williamson County Sun in English and, on December 17, 2020, in El Mundo Newspaper in Spanish.

16. The comment period for the Application closed on January 19, 202 1. 17. TCEQ's Office of the Chief Clerk received timely comments from various individuals and the City of Georgetown (the City). The City also timely filed a request for a Contested Case Hearing based upon issues raised during the public comment period.

18. The ED fi led his Response to Public Comments on August 6, 2021. 19. On November 3, 202 1, the Commission considered the hearing request at its open meeting and, on November 9, 2021, issued an Interim Order, directing that the following eight issues be referred to SOAH, denying all issues not referred, and setting the maximum duration of the hearing at 180 days from the date of the preliminary hearing until the date the PFD is issued by SOAH:

A) Issue A: Whether the Draft Permit is protective of water quality and the existing uses of the receiving waters in accordance with applicable Texas Surface Water Quality Standards (TSQWS), including protection of aquatic and tertestrial wildlife;

BJ Issue B: Whether the Draft Permit is consistent with the state's regionalization policy and demonstration of need for the volume requested in the application for a new discharge permit pursuant to Texas Water Code section 26.0282;

C) Issue C: Whether the Draft Permit is protective of the health of the nearby residents;

D) Issue D: Whether the Draft Permit complies with applicable requirements regai-ding nuisance odors; E) Issue E: Whether the Application is substantially complete and accurate;

F) Issue F: Whether the Draft Pennit complies w ith the TCEQ's antidegradation policy and procedures;

G) Issue G: Whether the Draft Permit should be altered or denied based on the AIRW's compliance history; and H) Issue H: Whether the Draft Permit contains sufficient provisions to ensure ptotection of water quality, including necessary operational requirements.

20. On January 16, 2022, notice of the preliminary hearing was published in English in the Williamson County Sun and, on January 13, 2022, in Spanish in El Mundo Newspaper. The notice included the time, date, and place of the hearing, as well as the matters asserted, in accordance with the applicable statutes and rules. Proceedings at SOAH

21. On February 24, 2022, a preliminary hearing was convened in this case via v ideoconference by SOAH ALJs Andrew Lutostansk.i and Ross Henderson. Attorney Helen Gilbert appeared for AJRW; attorney Patricia Carls appeared for the City; attorney Bobby Salehi appeared for the ED; attorney Jennifer Jamison appeared for the Office of Public Interest Counsel (OPIC); Jim Webb appeared for himself; and John Carlton appeared for Jonah.

22. Mr. Webb and Jonah sought party status at the preliminary hearing, and the ALJs granted those requests. Mr. Webb submitted his withdrawal from the proceeding on May 17, 2022.

23. Jurisdiction was noted by the ALJs and the Administrative Record, and AIRW's exhibits AIRW Exhibit 1-7 were admitted. 24. A second preliminary hearing was held via videoconference by SOAH ALJs Lutostanski and Katerina DeAngelo on May 12, 2022. All parties appeared through their respective representatives and the ALJs ruled on all timely-filed motions and objections. 25. On May 23-25 , 2022, ALJs Lutostanski and DeAngelo convened the hearing on the merits via videoconference and all parties appeared through their respective representatives. The record closed on June 24, 2022, after the parties filed post-hearing briefs. Protection of Water Quality and Existing Uses, Including Aquatic and Terrestrial Wildlife 26. The prima facie demonstration that the Draft PeJmit is protective of water quality and the existing uses of the receiving waters in accordance with applicable Texas Surface Water Quality Standards (TSWQS), including protection of aquatic and terrestrial wildlife, was not rebutted. 27. TSWQS apply to surface water in the state and are set by the Commission at levels designed to be protective of public health, aquatic resources, terrestrial life, and other environmental and economic resources. The applicable water quality standards are the TSWQS in 30 Texas Administrative Code Chapter 307. 28. The TSWQS consist of general standards, nartative standards, surface water segment~specific numeric standards, nwneric standards for toxic substances, and antidegradation review. 29. The TSWQS establish specific uses for each classified water body in the state and also provide numeric criteria for each classified stream. 30. The provisions of the Draft Permit are protective of water quality and are in accordance with the TSWQS.

31. The Draft Permit is protective of water quality and existing uses of the receiving water. s

32. The Draft Permit is protective of aquatic and terrestrial wildlife. Regionaliza tion 33. To effectuate its policy of encouraging regionalization of wastewater services, TCEQ requires an applicant to provide certain information to allow TCEQ to conduct a regionalization analysis. 34. No part of the Facility or development is within the City's corporate limits. 35. The proposed Facility and its discharge are within the City's extraterritorial jurisdiction. 36. Properties in the City's extraterritorial jurisdiction that desire wastewater services from the City must first submit a petition for voluntary annexation. 37. The ordinance requiring annexation for wastewater services may be waived by the City Council. 38. As pa1t of its Application, AIRW provided email correspondence to and from nearby providers regarding whether they would provide sewer service. 39. AIRW's written communications with nearby providers were sufficient, and AIRW was not required to submit certified letters because the emails provide similar tracking and traceability.

40. AIRW explored securing wastewater services from the City, and the City placed conditions on providing service, including: the Facility site would have to be annexed into the City and comply with the City's land use restrictions. 41. There was no indication that the City was willing to waive the annexation and land use requirements. 42. AIRW received a conditional offer for sewer service from the City. The City deniedAIRW's request for service unless AIRW agreed to annexation and land use restrictions.

43. The ED requested from AIRW a cost analysis of expenditures that includes the cost of connecting to the CCN facilities versus the cost of the proposed facility or expansion.

44. Constructing a new plant will cost approximately $300,000 more than connecting to the City's system. 45. Because of the higher property tax rate inside the City than outside it in the unincorporated area and the City's condition of annexation to connect to its system, connecting carries with it an approximately $20 million cost due to diminution in property value.

46. Costs weigh in favor of granting AIRW's application. 47. The evidence fails to show that easements and the delay inherent to acquiring them are impediments to connecting to the City's system. 48. Even if easements were needed, the evidence fails to show that AIRW tried and failed to secure them. 49. There is no regional provider designated for the area where the Facility is proposed to be located. 50. The proposed Facility and its discharge are not within the sewer CCN of any retail public utility. 51. The proposed Facility and its discharge are partially within Jonah's district boundaries and wholly within Jonah's water CCN area. 52. The City did not request Jonah 1 s consent to provide wastewater service to the Facility, and Jonah has not given consent for the City to operate within its boundaries.

53. DELETED 54. DELETED Nearby Residents 55. The prima facie demonstration that the Draft Permit is protective of the health of nearby residents was not rebutted. 56. The Draft Permit contains adequate pe11nit limits and monitoring requirements to protect the health of nearby residents. 57. The monitoring and sampling requirements in the Draft Permit comply with the Commission rules.

58. The Draft Permit contains appropriate effluent limits.

59. The Draft Permit is protective of human health, including those of nearby residents. Nuisance Odors 60. AIRW will control nuisance odors by owning the 150-foot buffer zone from the wastewater treatment plant units to the property line. 61. The evidence failed to show that the discharge will go into any body of water that crosses or abuts any park, playground, or schoolyard within one mile of the point of discharge. Completeness and Accuracy of Application 62. The prima facie demonstration that the Application is substantially complete and accurate was not rebutted. 63. The Application went through both an administrative and a technical review.

64. The Application included all required infonnation and was substantially complete and accurate.

Antidegradation 65. The prima facie demonstration that the Draft Permit complies with TCEQ' s antidegradation policy and procedures was not rebutted. 66. T he ED performed a Tier 1 and Tier 2 antidegradation review of the receiving waters in accordance with 30 Texas Administrative Code section 307.5. 67. The narrative and numeric criteria to protect existing uses will be maintained throughout the receiving waters; therefore, existing water quality uses wiII be maintained and protected.

68. The existing water quality uses of the receiving waters of the unnamed tributary of unnamed tributary, lV1ankins Branch, the San Gabriel/No1th Fork San Gabriel River in Segment No. 1248 of the Brazos River Basin w ill not be impaired by the Draft Permit as long as AIRW complies with the Draft Permit, which will satisfy the antidegradation Tier 1 requirements. 69. The Draft Permit will not cause significant degradation of water quality in the receiving waters of the unnamed tributary, Mankins Branch, the San Gabriel/North Fork San Gabriel River in Segment No. 1248 of the Brazos River Basin as long as AIRW complies with the Draft Permit, which wi ll satisfy the antidegradation Tier 2 requirements.

70. The Draft Permit complies with TCEQ's antidegradation policy and procedures. Compliance History 71. AlRW' s compliance status is unclassified. 72. No evidence was presented that indicated that AIRW's compliance history should alter or result in permit denial. 73. AIRW's compliance history of unclassified does not serve as a basis for alteration or denial of the Draft Permit.

Operational Requirements

74. The prima facie demonstration that the Draft Permit contains sufficient provisions to ensure protection of water quality, including necessary operational requirements, was not rebutted.

75. The operational requirements in the Draft Permit are sufficient to ensure protection of water quality. Transcription Costs

76. Reporting and transcnpt1on of the hearing on the merits was warranted because the hearing lasted for three days. 77. All parties fully participated in the hearing by presenting witnesses and cross- examining witnesses; howeverj Jonah's participation in the hearing was minor and disproportionate to the City and AIRW. 78. Both the City and AIRW participated roughly equally in the hearing and cited to the transcript in their closing arguments; therefore, both sides benefitted from having a transcript.

79. There was no evidence that any patty subject to allocation of costs 1s financially unable to pay a share of the costs. 80. The total cost for recording and transcribing the preliminary hearing and the hearing on the merits was $8,848.75.

81. AIRW and the City should each pay one-half of the transcription costs.

II. CONCLUSIONS OF LAW

1. TCEQ has jurisdiction over this matter. Tex. Water Code, chs. 5, 26. 2. SOAH has jurisdiction to conduct a hearing and to prepare a PFD in contested cases referred by the Commission under Texas Government Code section 2003.047.

3. Notice was provided in accordance with Texas Water Code sections 5.1 14 and 26.028; Texas Government Code sections 2001.051 and 2001.052; and 30 Texas Administrative Code sections 39.405 and 39.551 . 4. The Application is subject to the requirements in Senate Bill 709, effective September 1, 2015. Tex. Gov'tCode § 2003.047(i-1)-(i-3). 5. AIRW's filing of the Administrative Record established a prima facie case that: ( 1) the Draft Permit meets all state and federal legal and technical requirements; and (2) a permit, if issued consistent with the Draft Permit, would protect human health and safety, the environment, and physical property. Tex. Gov't Code§ 2003.047(i-1); 30 Tex. Admin. Code§ 80.17. 6. AIRW retains the burden of proof on the issues regarding the sufficiency of the Application and compliance with the necessary statutory and regulatory requirements. 30 Tex. Admin. Code§ 80. l 7(a). 7. The City did not rebut the prima facie demonstration by demonstrating that one or more provisions in the Draft Permit violate a specifically applicable state or federal requirement that relates to a matter referred by TCEQ. Tex. Gov't Code§ 2003.047(i-2); 30 Tex. Admin. Code§ 80. l 17(c). 8. The Draft Permit is protective of water quality and the existing uses of the receiving waters in accordance with applicable TSWQS, including protection of aquatic and terrestrial wildlife. 9. The Draft Pennit is protective of the health of residents near the proposed Facility and discharge route.

10. The Application demonstrates compliance with TCEQ's regionalization policy. Tex. Water Code§§ 26.003, 26.081(a)-(b), (d); 26.0282.

11. The Application demonstrates a need for the Draft Permit. Tex. Water Code § 26.0282. 12. The Draft Permit contains sufficient provisions to prevent nuisance odors. 30 Tex. Admin. Code§§ 217.38, 309. l 3(e). 13, The Application is substantially complete and accurate.

14. The Draft Permit complies with TCEQ's antidegradation policy. 30 Texas Admin. Code§§ 307.5, 307.6(b)(4). 15. AIRW's compliance history does not raise issues regarding AIRW's ability to comply with the material terms of the Draft Permit or that would warrant altering the terms of the Draft Permit.

16. The Draft Permit contains sufficient prov1st0ns, including necessary operational requirements, to ensure protection of water quality.

17. No transcript costs may be assessed against the ED or OPIC because TCEQ's rules prohibit the assessment of any cost to a statutory party who is precluded by law from appealing any ruling, decision, or other act of the Commission. 30 Tex. Admin. Code§ 80.23(d)(2). 18. Factors to be considered in assessing transcript costs include: the party who requested the transcript; the financial ability of the party to pay the costs; the extent to which the party participated in the hearing; the relative benefits to the various parties of having a transcript; the budgetary constraints of a state or federal administrative agency participating in the proceeding; and any other factor which is relevant to a just and reasonable assessment of the costs. 30 Tex. Admin. Code§ 80.23(d)(l). 19, Considering the factors in 30 Texas Admi11istrative Code section 80.23(d)(l), a reasonable assessment of hearing transcript costs against parties to the contested case proceeding is: one-half to AIRW and one-half to the City.

III. EXPLAINATION OF CHANGES

1. The Commission determined to adopt the Administrative Law Judges' proposed Order with changes.

2. The Commission determined to amend the second sentence in Finding of Fact #3 based on the Executive Director's Exceptions and agreed to by the Administrative Law Judges to read: "The unclassified receiving water uses are limited aquatic life use fo r the unnamed tributary and Mankins Branch (intennittent with perennial pools), and high aquatic life use for Mankins Branch (perennial)."

3. The Commission determined to amend Finding ofFact#51 based on Jonah's Exceptions and agreed to by the Administrative Law Judges to read: "The proposed Facility and its discharge are partially within Jonah's district boundaries and wholly within Jonah's water CCN area."

4. The Commission determined to delete Findings of Fact #53 and #54 as unnecessary to the Commission's regionalization policy consideration in this case.

NOW, THEREFORE, BE IT ORDERED BY THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY, IN ACCORDANCE WITH THESE FINDINGS OF FACT AND CONCLUSIONS OF LAW, THAT:

1. AIR W's Application for Texas Pollutant Discharge Elimination System PennitNo. WQ0015878001 is granted as set forth in the Draft Permit.

2. AIRW and the City must each pay one-half of the transcription costs.

3. The Commission adopts the ED's Response to Public Comment m accordance with 30 Texas Administrative Code section 50.117. 4. All other motions, requests for entry of specific Findings of Fact or Conclusions of Law, and any other requests for general or specific relief, if not expressly granted herein, are hereby denied. 5. The effective date of this Order is the date the Order is final, as provided by Texas Government Code section 2001.144 and 30 Texas Administrative Code section 80.273.

6. TCEQ's Chief Clerk shall forward a copy of this Order to all paLiies. 7. If any provision, sentence, clause, or plu·ase of this Order is for any reason held to be invalid, the invalidity of any provision shall not affect the validity of the remaining portions of this Order. ISSUED: tJ" vL-~ be. ^[2]..s, ~ z...-,__ TEXAS COMMISSION ON ENVIRONMENTAL QUALITY TPDES PERMIT NO. WQ0015878001 [For TCEQ office use only - EPA I.D. No. TX0140244}