On April 8, 2016, the Texas Court of Appeals, Third District, at Austin, issued an important decision interpreting the standard of review that applies to the judicial review of certain administrative enforcement orders issued by the Texas Commission on Environmental Quality (TCEQ). The case is TCEQ v. Exxon Mobil Corporation, et al., and involves the cleanup of the Voda Petroleum State Superfund Site (VPSSS). The Court of Appeals held that the appropriate standard for the judicial review of the TCEQ’s order was the “preponderance of the evidence” test, where the TCEQ has the burden to prove the defendants are liable parties under the law. The TCEQ argued that the “substantial evidence” test was applicable. On October 31, 2016, following a motion for rehearing filed by the TCEQ, the Court of Appeals withdrew that opinion, and substituted a new opinion which essentially clarified the original ruling, and denied the TCEQ’s motion. The Court of Appeals, in the substituted opinion, held that the TCEQ could issue administrative enforcement orders under both Sections 361.188 and 361.272 of the Texas Solid Waste Disposal Act (TSWDA), and that the TSWDA, when properly construed, required that the judicial review of such orders should be conducted in accordance with Section 361.322 of the TSWDA, which sets forth the elements of the “preponderance of the evidence” test.

The VPSSS was used by Voda Petroleum, Inc. as an oil-blending and oil-recycling facility for several years, until it was abandoned in 1991. A few years later, both the Environmental Protection Agency (EPA) and the TCEQ’s predecessor agency, the Texas Natural Resources Conservation Commission, investigated the conditions at the site. EPA conducted an emergency removal action in 1996, for which it recovered at least some of its costs from responsible parties at the site—generally companies that were customers of Voda Petroleum. Since the site did not qualify for inclusion in EPA’s CERCLA cleanup program, the matter was referred to the State of Texas for further remedial action.

The TCEQ has used its authority under the TSWDA in an effort to clean up the VPSSS, which has been placed on the Texas state Superfund registry. The listing has been controversial, and apparently no one stepped forward to undertake the cleanup. Indeed, several potentially responsible parties have argued that there is no evidence to support the listing or their liability under the law.

Finally, in February 2010, the TCEQ issued a unilateral cleanup administrative order, as authorized by Sections 361.188 and 361.272 of the TSWDA, to over 350 parties. Exxon Mobil Corporation, ExxonMobil Oil Corporation, Pennzoil-Quaker State Company and Shell Oil Company then filed a lawsuit in the Travis County District Court and the TCEQ filed a counter-petition and third-party petition seeking costs recovery against ExxonMobil and Shell and other potentially responsible parties. Discovery was conducted for several more years, and then the TCEQ filed a plea to the jurisdiction of the court. The plea was denied, and this appeal followed.

The Court of Appeals substituted opinion clarifies its reasoning and its interpretation of the various provisions of the TSWDA that led the Court of Appeals to conclude that the preponderance of the evidence test was the appropriate standard of review. In view of the significance of this ruling, further appeals are always possible.