Cindy Olson Bourland, Justice

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 419 JUDICIAL DISTRICT
NO. D-1-GH-13-000678, HONORABLE GISELA D. TRIANA, JUDGE PRESIDINGMEMORANDUM OPINION

Appellants, Sierra Club and Public Citizen, appeal the district court's dismissal of their suit for judicial review of the Texas Commission on Environmental Quality's decision to amend and renew Southwestern Electric Power Company's wastewater discharge permit. For the reasons that follow, we will affirm the district court's order dismissing appellants' appeal for lack of subject-matter jurisdiction.

BACKGROUND

On August 31, 2010, Southwestern Electric Power Company (SWEPCO) applied to renew and amend its wastewater discharge permit. Appellants raised concerns during the public comment period, then requested a contested case hearing on whether the amendment and renewal should be granted. Sierra Club and Public Citizen claimed associational standing to request the hearing based on the alleged right of two of their members—Richard LeTourneau and Clint Rosborough—to an administrative contested case hearing on the merits of SWEPCO's application as affected persons within the meaning of the Texas Water Code. See 30 Tex. Admin. Code § 55.205(a) (association may request contested case hearing if at least one of its members has standing to request hearing in his/her own right and other circumstances are met); Tex. Water Code §§ 5.556(a),(c),(d) (affected persons who filed public comments on permit application may request contested case hearing), .115(a) (defining who is "affected" "[f]or the purpose of an administrative hearing held by or for the commission involving a contested case").

TCEQ referred appellants' request to the State Office of Administrative Hearings to determine if appellants' members were affected persons entitled to a contested case hearing and, if so, to hear their substantive objections to SWEPCO's permit application. The administrative law judge determined that appellants lacked associational standing to request a hearing under Section 55.205 of the Texas Administrative Code because LeTourneau and Rosborough were not affected persons within the meaning of Section 5.115 of the Texas Water Code. Consequently, the administrative law judge recommended that TCEQ deny appellants' request for a substantive contested case hearing on the merits of SWEPCO's permit application. TCEQ denied appellants' request for a contested case hearing and granted SWEPCO's permit in an open meeting on December 5, 2012. TCEQ issued an order memorializing these decisions shortly thereafter on December 10, 2012. Appellants filed a motion for rehearing, which was overruled by operation of law.

Appellants filed their petition for judicial review with the district court on February 22, 2013 under Section 2001.171 of the Texas Administrative Procedure Act (APA) and Section 5.351 of the Water Code, seeking reversal of TCEQ's order issuing the permit. In their brief to the district court, appellants expressly abandoned any challenge to TCEQ's determination that LeTourneau and Rosborough were not affected persons entitled to a substantive contested case hearing. Instead, they sought review of TCEQ's final decision to grant the permit. Specifically, appellants alleged that TCEQ acted arbitrarily and capriciously in granting the permit because the permit failed to include technology-based effluent limitations on the discharge of certain toxic contaminants, failed to include conditions that would ensure that certain cooling water intake structures reflected the best technology available, and failed to provide a statement of basis sufficient to satisfy the standards set out in the Texas Administrative Code.

TCEQ filed a plea to the jurisdiction, arguing that the district court lacked jurisdiction to hear appellants' substantive claims regarding the permit because appellants did not exhaust the administrative remedy of fully participating in a contested case hearing. The district court dismissed the case for lack of subject-matter jurisdiction and this appeal followed.

STANDARD OF REVIEW

"Subject-matter jurisdiction is essential to the authority of a court to decide a case." Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993). "A plea to the jurisdiction challenges a trial court's authority to determine the subject matter of a specific cause of action." Slay v. Texas Comm'n on Envtl. Quality, 351 S.W.3d 532, 544 (Tex. App.—Austin 2011, pet. denied) (citing Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004)). The plaintiff bears the burden of alleging facts that affirmatively show that the trial court has subject-matter jurisdiction. Id. To the extent that these facts are not negated, we take them as true and construe them liberally with an eye toward the pleader's intent. Id. Our ultimate inquiry is whether the pleaded facts would affirmatively demonstrate a claim or claims within the trial court's subject-matter jurisdiction. Id. "Whether a pleader has alleged facts that affirmatively demonstrate a trial court's subject matter jurisdiction is a question of law reviewed de novo." Miranda, 133 S.W.3d at 226. If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency, and the plaintiffs should be afforded the opportunity to amend. Texas Comm'n on Envtl. Quality v. Bonser-Lain, 438 S.W.3d 887, 893 (Tex. App.—Austin 2014, no pet.) (citing Miranda, 133 S.W.3d at 226-27). However, if the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend. Id.

CONTENTIONS OF THE PARTIES

Appellants contend that the district court erred in determining that they failed to exhaust their administrative remedies and dismissing for lack of subject-matter jurisdiction. According to appellants, Section 5.351 of the Texas Water Code allows them to seek judicial review of TCEQ's decision to issue the permit without first participating in a contested case hearing. Appellees counter that the contested case hearing remedy was available under the Water Code and that Texas common law and the APA make exhaustion of all available administrative remedies a prerequisite to judicial review regardless of whether the Water Code explicitly requires a party to pursue any particular remedy before appealing to the courts under Section 5.351. According to appellees, appellants failed to exhaust the contested case hearing remedy because they did not fully participate in a substantive contested case hearing adjudicating the factual issues bearing on the application. Appellants counter that they exhausted this remedy by doing everything within their power—at the agency level—to secure a contested case hearing. According to appellants, that remedy was exhausted upon TCEQ's denial of the contested case hearing because it was no longer available to them. Appellants further contend that they have judicial standing because LeTourneau and Rosborough are allegedly affected persons within the meaning of Section 5.351.

DISCUSSION

By appealing TCEQ's decision to grant SWEPCO's permit application, appellants are asking the courts to adjudicate the merits of the application and the factual bases for TCEQ's decision. The district court correctly determined that it lacked jurisdiction to do this because TCEQ had exclusive original jurisdiction over this dispute and appellants did not exhaust all of their administrative remedies prior to resorting to judicial review.

TCEQ has exclusive jurisdiction over wastewater discharge permits. "[U]nder the exclusive jurisdiction doctrine, the Legislature grants an administrative agency the sole authority to make an initial determination in a dispute." Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002) (emphasis in original). "An agency has exclusive jurisdiction when a pervasive regulatory scheme indicates that the legislature intended for the regulatory process to be the exclusive means of remedying the problem to which the regulation is addressed." Vickery v. Stanley, No. 12-09-00408-CV, 2010 WL 4638714, at *4 (Tex. App.—Tyler Nov. 17, 2010, no pet.) (mem. op.) (citing Subaru of Am., Inc., 84 S.W.3d at 221). Because this is a jurisdictional question, we review it de novo. Subaru of Am., Inc., 84 S.W.3d at 222. The regulatory scheme behind wastewater discharge permits is pervasive and indicative of the legislature's intent to grant exclusive jurisdiction to TCEQ. See Tex. Water Code §§ 5.013(a) (granting TCEQ general jurisdiction over "water and water rights including the issuance of water rights permits, water rights adjudication, cancellation of water rights, and enforcement of water rights"), 26.023 (TCEQ "has the sole and exclusive authority to set water quality standards for all water in the state"), .027(a)-(b) (TCEQ "may issue permits and amendments to permits for the discharge of waste or pollutants into or adjacent to water in the state" and those desiring permits must submit applications to TCEQ), .028 (governing involved process by which TCEQ reviews and approves wastewater discharge permits); Vickery, 2010 WL 4638714, at *4 (finding that TCEQ has exclusive jurisdiction over regulation of underground storage tanks because it has exclusive jurisdiction over compliance with Chapter 26 of Water Code and because of Water Code's pervasive regulatory scheme).

The Legislature has also provided an exclusive administrative remedy by which parties can challenge TCEQ's permitting decisions and the factual bases for them—the contested case hearing. Chapter 5, Subchapter M of the Texas Water Code, which governs environmental permitting procedures, allows a party to "request that [TCEQ] reconsider the executive director's decision or hold a contested case hearing." Tex. Water Code § 5.556(a). The Legislature has not chosen to make contested case hearings available to the general public. In order to invoke this remedy, a party must be an "affected person" within the meaning Texas Water Code Section 5.115. Tex. Water Code §§ 5.556(a) (TCEQ "may not grant a request for a contested case hearing unless [TCEQ] determines that the request was filed by an affected person as defined by Section 5.115"), .115(a) (for the purpose of an administrative hearing held by or for TCEQ, an affected person is someone with "a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by the administrative hearing. And interest common to members of the general public does not qualify as a personal justiciable interest."), .115(a-1) (TCEQ "shall adopt rules specifying factors which must be considered in determining whether a person is an affected person in any contested case arising under the air, waste, or water programs within [TCEQ's] jurisdiction and whether an affected association is entitled to standing in contested case hearings," including in "matter[s] referred under Section 5.556.").

Because TCEQ has exclusive original jurisdiction over this dispute and the Legislature has provided for the contested case hearing remedy, appellants were required to fully participate in that hearing before seeking judicial review under Section 5.351. When "an administrative body has exclusive jurisdiction to make the initial determination in a dispute, a party must exhaust all administrative remedies before seeking judicial review of the decision. Until the party has satisfied this exhaustion requirement, the trial court lacks subject matter jurisdiction." Thomas v. Long, 207 S.W.3d 334, 340 (Tex. 2006). The exhaustion doctrine "is well established in the jurisprudence of administrative law . . . and has long been recognized in Texas." Texas Air Control Bd. v. Travis Cty., 502 S.W.2d 213, 215 (Tex. Civ. App.—Austin 1973, no writ) (citations omitted). As "Texas courts have repeatedly held, Section 5.351 of the Water Code must be construed in the context of longstanding jurisdictional limitations on judicial review of agency orders," and "section 5.351's waiver of [sovereign] immunity is limited to administrative actions that are regulatory in nature and only upon the exhaustion of all administrative remedies." Bonser-Lain, 438 S.W.3d at 895 (emphasis added). Appellants were, therefore, required to demonstrate that they were affected persons pursuant to Section 5.115 and fully participate in a contested case hearing before seeking judicial review of the merits of SWEPCO's permit under Section 5.351. Absent such exhaustion of remedies, appellants were jurisdictionally barred from challenging the factual bases supporting the permit in district court.

We disagree with appellants' contention that their failure to obtain a contested case hearing is tantamount to exhaustion of this remedy. They have expressly abandoned any challenge to TCEQ's decision not to grant them a contested case hearing. Instead, they ask the courts to make the factual determinations that would normally be adjudicated in a contested case hearing and ultimately decided by TCEQ. As we have previously noted, one purpose of the exhaustion doctrine is to prevent premature judicial intervention which "may defeat the basic legislative intent that full use should be made of the agency's specialized understanding within the particular area of regulation." Texas Air Control Bd., 502 S.W.2d at 215.

CONCLUSION

For the foregoing reasons, we affirm the district court's order of dismissal for want of jurisdiction.

/s/_________

Cindy Olson Bourland, Justice Before Justices Puryear, Pemberton, and Bourland Affirmed Filed: March 31, 2016