Below is the HillCo client report from the May 16 House Judiciary & Civil Jurisprudence Committee hearing.
 
The committee met to hear testimony from the State Office of Administrative Hearings and to consider the following interim charge:
 
Examine the public policy implications of litigation related to environmental contamination brought by local governments, in particular whether such litigation supports effective remediation.
 
State Office of Administrative Hearings (SOAH)
 
Cathleen Parsley, Chief Administrative Law Judge, SOAH

  • SOAH is under Sunset review this year
  • The enabling statute does a good job of correctly reflecting the mission of SOAH
  • Would like to staff to look at the way SOAH is funded; the multiple methods of finance do not always serve the agency in the best and most efficient way possible
  • There is a public policy component to the inter-agency contract portion of funding SOAH; it doesn’t matter how a case is funded however, SOAH will do the same job either way
  • Rep. Richard Raymond asked what percentage of SOAH decisions are agreed to by agencies or upheld
    • Typically somewhere in the 80-90% range
  • Raymond noted he asked because of the recent orthodontia Medicaid situation; SOAH made the determination that the orthodontists had not done anything wrong then HHSC overruled the verdict; troubling that the whole trial was conducted just to have the agency override that decision
  • Rep. Todd Hunter asked about a hypothetical situation where a taxpayer has a disagreement with an agency and takes it to SOAH; SOAH assigns an administrative law judge (ALJ) and the taxpayer wins the case; most people do not know that in certain circumstances the decision goes to the head of the agency who can overturn that decision; what is the point if a system can be overthrown because one person doesn’t like a decision; if there is going to be a system to help taxpayers, the accused agency should not be able to overturn the ALJ decisions
    • Would be happy to work with the legislature to find a solution
  • Back to funding, would like Sunset to look at funding SOAH entirely with general revenue; would give predictability and stability to the agency
  • A system that integrates timekeeping, financial functions, etc. would be good to produce billing reports and reports to the legislature; currently the systems do not interact; systems already exist that would be integrated and would be more efficient and seamless
  • SOAH has between 30,000-40,000 cases that come through the door every year; not all of them go to hearings but that is a large case load
  • Chairman Tryon Lewis asked for a summary of the agency in general
    • SOAH has 57 ALJs, 36 of which are located in Austin the rest are in field offices; there are 109 total employees in the offices; the caseload on the general docket besides administrative license revocations is about 4,500-7,000 cases each year; hearings could be 15-30 minutes in some instances or very large lengthy hearings

 
Litigation Related to Environmental Contamination Brought on By Local Governments
 
Caroline Sweeney, Deputy Director, Office of Legal Services, Texas Commission on Environmental Quality (TCEQ)

  • Under Chapter 7 of the Texas Water Code, local government may bring a suit in the same manner as TCEQ
  • Cases usually arise from an investigation by local government and are brought to the local county or to Travis County
  • Office of Attorney General represents TCEQ so these cases are referred to them; penalties are split between local government and the state
  • TCEQ has 50 such cases active right now
  • Last year TCEQ issued 2,000 administrative orders
  • Mostly have to do with municipal solid waste violations
  • Ector, Harris and Travis County have brought the majority of these cases
  • Lewis asked what TCEQ does in regard to remediation and how that interrelates to local government lawsuits
    • It is a case by case inquiry, cannot think of how it has affected remediation in these cases
  • Lewis asked if there has been any conflict or problems with remediation efforts created by filing of these lawsuits
    • Not at this time
  • Lewis asked what the distinction is between administrative penalties and fines from the fine schedules; are administrative penalties reserved for special cases
    • When a case goes through the process at the agency and not to district court, there are administrative penalties, there is a very structured process taken up to arrive at the penalties; can also go into state district court and pursue civil penalties; usually done In more egregious cases or when there have been multiple problems with the same entity
  • Lewis asked if administrative penalties are within the $25,000 per day limit
    • Yes
  • How frequently does the Commission asses administrative penalties versus fines
    • Very frequently, last year over 2,000 administrative orders were filed with penalties connected to them
  • Lewis asked if an administrative penalty has been assessed and paid does that prevent a local government from taking action
    • Correct, that is by statute
  • Rep. Ana Hernandez asked if a penalty is assessed if it can be reduced or if it is final
    • It depends; sometimes a penalty is put out to a respondent, if they can come back with reasons why it should be lowered that will be considered
  • Rep. Jessica Farrar asked how often that occurs; what happens when they aren’t paid
    • When they aren’t paid it is referred to the Attorney General; less than 50% of the time are the penalties challenged
  • Farrar asked how TCEQ works with the local government when they file a suit
    • TCEQ refers the matter to the Attorney General who works with the local government moving forward in that case

 
John Neerman, Chief, Environmental Protection Division, Attorney General’s Office

  • Farrar asked how the Attorney General works with local governments
    • After TCEQ refers a case, the Attorney General files a notice of appearance and reserves the question of whether they will join the case to a later date; typically the Attorney General coordinates with the prosecution but it varies widely case by case depending on the complexity of the case, experience of the prosecutor, etc.
  • Raymond asked if the witnesses feel like they have plenty of staff to address these issues
    • Both agreed that they have plenty of staff

 
Jack Cagle, Commissioner Precinct 4, Harris County

  • Not sure there is a problem, in this situation, that requires the attention of the committee
  • In terms of environmental litigation matters, there are only 6 cases that Harris County has ever been involved with; three are pending today
  • When litigation is pending in one avenue, some entities attempt to bring the litigation to another avenue to seek a more favorable resolution; most of the time Harris County attempts to work within itself to find solutions to these cases
  • There is a question of whether a County should have to remit a case to the state or to the federal authorities to find a solution in a case having only to do with the county
  • When a county does not have competent counsel, the burden can be shifted up to the state
  • Local government should be involved and should have the ability to solve these cases

 
Cathy Sisk, Former Chair of Environmental Division, Harris County Attorney’s Office

  • Also worked in the environmental division of the Attorney General’s Office and formerly served as Harris County government relations director
  • There are currently 1,439 significant environmental permits within Harris County; wastewater treatment, air permits and solid waste facilities
  • Harris County pollution control is staffed with people who review the permits and respond to complaints in the county which are often referred to the county from TCEQ
  • The partnership with local governments and the state have worked very well so far
  • Not quite sure what the problem being addressed is

 
Robert Soard, First Assistant County Attorney, Harris County

  • Serves as the attorney for all county entities and government districts and all elected officials
  • Have about 100 attorneys in the office and about 100 non-attorneys
  • There are four attorneys that work in the environmental division within the office
  • From time to time there are very complex cases for which outside counsel must be retained
  • Want to retain the ability to retain outside counsel for the biggest and most complex cases
  • Hiring outside counsel is done after a thorough review of each case; when counsel is selected, a contract is negotiated and is then subject to approval of the Harris County Commissioner’s Court and subject to the government code which says contingency fees cannot be more than four times the rate of the normal attorneys; settlements must also be approved by Harris County Attorney, Harris County Commissioner’s Court and the Attorney General serving on behalf of the TCEQ
  • Raymond asked about the three pending cases, were the other three resolved
    • Those cases were settled by negotiation and remediation
  • Raymond asked how long the other three have been pending
    • Since about 2010
  • Farrar asked what those cases are like
    • One case is in regard to dioxin being leaked into the San Jacinto River; the other two  have to do with leaking underground storage tanks; the county is attempting to recover expenses related to those cases
  • Rep. Marsha Farney asked if there are people who have cases brought against them and seek to remediate the situation, is litigation still brought against them
    • Most times the county attempts to solve the problem and only brings litigation in the most egregious cases where significant harm is being done
    • Sisk noted 96% of cases are solved without any formal action; enforcement cases involve some sort of egregious action or some sort of environmental harm where no effort is made to remediate the damage; not aware of a case where a defendant has cooperated completely with TCEQ and been an innocent landowner and been brought to trial

 
George Christian, Attorney, Civil Justice League

  • Local enforcement is very critical; the question is what best encourages people to clean up a mess they create; want the civil justice system to handle those matters
  • Raymond asked if local government has run amok in these instances
    • There isn’t evidence to assume so

 
John Riley, Attorney, Bracewell & Giuliani

  • The three cases in Harris County were initiated in 2010 and 2011 and have been pending for several years
  • The particular case Bracewell is involved with are not in regard to remediation, they have to do with finding appropriate penalties for actions between 1967-2011
  • There are programs developed by the state that work very well in getting entities to remediate their properties without litigation
  • Would like for local governments to be bound , in enforcement actions, by the boundaries the state is limited to; there should not be spate policies when a local government, under authority of the state, seeks penalties for actions taken by an entity; consistency is highly important
  • Lewis asked if there have been instance when a company has come onto a previously contaminated site with no other connection to the former owner and been penalized when they have the intent to remediate the site
    • There is the possibility that a penalty can be assessed but the witness could not think of a particular instance; this isn’t a problem but there needs to be predictability and transparency in these situations

 
John Ballotti, Mayor, City of Commerce

  • An environmental violation can have a huge impact on citizens of a government in the matter of a few hours
  • Centralizing the control of environmental actions would produce a higher cost for these actions and could increase the time it takes to enforce actions and therefore more significantly impact the health of citizens
  • Retaining local control is the only way to protect citizens from the harms of potential environmental matters
  • Farrar asked what the local government would do with funds recouped through a fine
    • Generally they come back to the city to be used for city work

 
John Horn, County Judge, Hunt County

  • If the state were to take away local enforcement of illegal dumping, only criminal action, EPA action or TCEQ action would be left to deal with the problem; none of these options are sufficient as criminal action can leave a person in jail and unable to handle remediation and TCEQ or EPA action can be costly and take some time to complete

 
David Jones, Investigator, Hunt County Office of Homeland Security

  • Does not want anything done to hamper local government action on environmental offenses

 
Stephen Minick, Texas Association of Business

  • Most, if not all, of the environmental cleanup in Texas has been borne by business in the state
  • There is a question of what the policies of local governments should be in bringing action against business when operating outside of the enforcement authority of the state
  • Cases from local governments are about assessing penalties for very large amounts of money from situations that happened sometimes decades ago
  • If businesses feel that they can be subject to local government action after dealing with other agencies, they will stop remediation coming from settlements with those agencies
  • Has no interest in limiting local government enforcement ability
  • Has problems with penalty actions that have nothing to do with remediation or damage claims

 
Nathan Beedle, Attorney

  • Discussed the situation his client is involved with; client owns a strip center and was sued because of a dry cleaner across the street whose leaking tanks infiltrated the land under the strip center; client was in compliance with TCEQ requests and was still sued for damages; local action has not only hindered remediation, it has stopped all action from taking place on the site
  • Lewis asked if there are standards for fines in determining how to assess fines
    • No, there is no standard
  • Raymond asked Sisk if a local government can enter into an agreement not to take action against a business who would like to buy a property and remediate it
    • Yes
    • Riley agreed that the option exists but noted he has not informed clients that ability exists because there are generally less burdensome and easier options

 
Heather Mahurin, Legal Counsel, Texas Municipal League

  • A city’s main goal in one of these lawsuits is to recoup money that has been spent because of an environmental impact
  • Filing a lawsuit of this type requires that the city council pass a resolution that authorizes the civil suit

 
Nelson Roach, Texas Trial Lawyers Association

  • Believes that local enforcement of environmental laws have resulted in accelerating or effectuating remediation for the better
  • Discussed a situation in which the State of Oklahoma developed a remediation program in order to handle situations locally  rather than by EPA; without the ability of the local government to take action, the area would have never been cleaned up

 
John Dahill, General Counsel, Texas Conference of Urban Counties

  • Often times in these cases, the fact of pollution is not in question nor the identity of the polluter; what is in question is the culpability of the polluter
  • Just because a company is willing to stand up and fix the problem they created, it does not mean they should not be held accountable for letting the problem happen in the first place
  • Lewis asked about standards for determining fines
    • Not sure if there are standards; it should be determined case by case
  • Rep. Senfronia Thompson asked what guidance is given to courts in determining penalties
    • There are factors set out in case law that has been developed over the years