# San Antonio Bay Estuarine Waterkeeper v. Tex. Comm'n on Env't Quality & Max Midstream, LLC Supreme Court of Texas, No. 25-0564 **San Antonio Bay Estuarine Waterkeeper v. Tex. Comm'n on Env't Quality & Max Midstream, LLC, No. 25-0564, is before the Supreme Court of Texas. Key issue: When the Commission denies a contested-case hearing on an air permit without holding any evidentiary hearing, may it weigh and resolve disputed facts about the permit's effects against the requesters, and is its affected-person decision reviewed for substantial evidence?** Practice areas: environmental law, administrative law ## Key issues - When the Commission denies a contested-case hearing on an air permit without holding any evidentiary hearing, may it weigh and resolve disputed facts about the permit's effects against the requesters, and is its affected-person decision reviewed for substantial evidence? - If the requesters were denied a contested-case hearing, may a court still review the merits of the minor-source air permit, or does the Clean Air Act and exhaustion doctrine make participation in a contested-case hearing a prerequisite to judicial review? ## Factual History Max Midstream, LLC owns Seahawk Terminal, an oil storage and marine loading terminal in Point Comfort, and in 2020 applied to the Texas Commission on Environmental Quality (TCEQ) for a minor new source air permit to expand it to 4.8 million barrels of storage in 15 tanks with nine marine loading docks (Brief on the Merits (Petitioner), PDF pp. 18-19). TCEQ received over 2,500 comments and hearing requests, including from Waterkeeper, Texas Campaign for the Environment (TCE) and S. Diane Wilson, who named members Diane Wilson, John, and Janet Maresh (who live 1.79 miles from the terminal), Curtis Miller (who has asthma and fishes about two miles away) and Mauricio Blanco as affected by emissions, and who argued the application understated emissions and that the terminal should have needed a major-source permit (Brief on the Merits (Petitioner), PDF pp. 22-25). The Executive Director recommended denying the requests because the requesters lived too far away, TCEQ's Office of Public Interest Counsel recommended a hearing for Waterkeeper because of the Mareshes' proximity, and Max Midstream relied on a toxicologist's affidavit that impacts beyond a mile would be indiscernible, while the requesters replied with expert declarations that emissions would reach as far as five miles (Brief on the Merits (Petitioner), PDF pp. 26-28). The Commission denied every hearing request and issued the permit by an order of April 8, 2022 that gave no explanation and contained no findings of fact or conclusions of law (Brief on the Merits (Petitioner), PDF p. 28). TCEQ says the Commissioners reviewed the application, the staff's analysis, the comments and the parties' affidavits at an open meeting and found that none of the requesters would be affected differently from the general public (Brief on the Merits (Texas Commission on Environmental Quality), PDF pp. 24, 26). ## Procedural History The requesters moved for rehearing, which was denied by operation of law on June 2, 2022, and sued in Travis County district court, challenging both the denial of their hearing requests and the issuance of the permit on the merits (Brief on the Merits (Petitioner), PDF pp. 28-29). The district court reversed and remanded for a contested-case hearing, and the Fifteenth Court of Appeals reversed (714 S.W.3d 270), holding that the Commission could resolve fact disputes in reviewing the hearing requests, that substantial-evidence review applied, and that it lacked jurisdiction over the permit's merits because participation in a contested-case hearing is a prerequisite to judicial review (Brief on the Merits (Petitioner), PDF p. 29). The Supreme Court granted the petition for review on June 19, 2026. ## Issues Presented - Petitioners (Brief on the Merits (Petitioner), PDF p. 17): (1) whether the Commission abused its discretion or acted arbitrarily in denying the hearing requests by resolving disputed facts against requesters who showed constitutional standing, and whether the court of appeals applied the wrong standard in letting it do so without an evidentiary hearing; (2) whether the court of appeals erred in applying the APA's deferential evidentiary-record standard where no contested-case hearing preceded the decision and the order contains no findings or rationale; and (3) whether a reviewing court has jurisdiction over the permit's merits although the hearing request was denied. - TCEQ (Brief on the Merits (Texas Commission on Environmental Quality), PDF p. 14): whether the substantial-evidence standard applies to the order denying the hearing requests, whether that order was supported by substantial evidence, and whether the requesters may challenge the permit's merits. - Max Midstream (Brief on the Merits (Max Midstream, LLC), PDF p. 19): whether TCEQ may weigh and resolve disputed facts when evaluating hearing requests, whether substantial-evidence review applies to its affected-person determination, and whether the requesters must qualify for a contested-case hearing and exhaust administrative remedies before challenging the merits. ## Standard(s) of Review The Clean Air Act asks whether the Commission's action is "invalid, arbitrary, or unreasonable," which courts have read to incorporate the APA's substantial-evidence standard, though the petitioners add that agency action supported by substantial evidence can still be arbitrary and capricious (Brief on the Merits (Petitioner), PDF p. 32). ## Legal Arguments **Whether the Commission may resolve disputed facts when deciding who is an affected person.** **Petitioners (Waterkeeper, TCE, and Wilson):** The Water Code and TCEQ's rules treat a hearing request like a pleading, so a request that alleges facts showing a personal justiciable interest suffices, and the 2015 addition of the word "consider" does not let the Commission "weigh and resolve" disputed facts about the permit's merits without an evidentiary hearing (Brief on the Merits (Petitioner), PDF pp. 41-47). *TCEQ v. City of Waco* did not resolve the question, and the Commission's decision rested on a misapplication of the law (Brief on the Merits (Petitioner), PDF p. 47; Brief on the Merits (Petitioner's Reply Brief), PDF pp. 11-21). **TCEQ (Respondent):** The Water Code and the Commission's rules authorize it to consider all the evidence before it and to weigh that evidence in deciding whether a requester is affected, and this Court's decision in *City of Waco* and the courts of appeals' precedent support that process (Brief on the Merits (Texas Commission on Environmental Quality), PDF pp. 32, 36-37). **Max Midstream (Respondent):** A requester carries a burden beyond alleging a factual dispute in a pleading, and considering the underlying facts and merits of the application comports with constitutional standing principles (Brief on the Merits (Max Midstream, LLC), PDF pp. 30, 34). **Which standard of review applies, and whether the denial survives it.** **Petitioners (Waterkeeper, TCE, and Wilson):** Evidentiary-record review applies to agency fact findings made after an evidentiary hearing, not to a standing determination made without one, and the court of appeals wrongly implied fact findings the order never made, since the order does not say what factors the Commission relied on (Brief on the Merits (Petitioner), PDF pp. 53-69). **TCEQ (Respondent):** The court of appeals correctly applied substantial-evidence review, which this Court used in *City of Waco*, and the record supports the conclusion that the permit would have minimal effect and that none of the four named members is affected (Brief on the Merits (Texas Commission on Environmental Quality), PDF pp. 43, 48, 51). **Max Midstream (Respondent):** The substantial-evidence standard has long governed review of the Commission's rulings on hearing requests and requires deference, the record supports the finding that the requesters are not affected persons, and the denial was not arbitrary and capricious (Brief on the Merits (Max Midstream, LLC), PDF pp. 46, 56, 71). **Whether a court may review the permit's merits.** **Petitioners (Waterkeeper, TCE, and Wilson):** The Clean Air Act's judicial-review provision gives the right to appeal the Commission's whole order once a motion for rehearing is filed, and a contested-case hearing is not an exhaustion requirement, so the court of appeals should have reached the merits of the permit; reading it otherwise blocks every path to judicial review (Brief on the Merits (Petitioner), PDF pp. 70, 72, 76, 80). In reply, the petitioners say the Act, not the APA, governs and that participating in the permitting process exhausted their remedies (Brief on the Merits (Petitioner's Reply Brief), PDF pp. 32-41). **TCEQ (Respondent):** The Legislature conditioned the waiver of the Commission's sovereign immunity on exhausting all remedies, including participating in a contested-case hearing, and where a hearing was available but the requester was found not affected, the remedy is to challenge that determination (Brief on the Merits (Texas Commission on Environmental Quality), PDF pp. 27, 59, 65). **Max Midstream (Respondent):** The Clean Air Act alone does not govern, the requesters did not exhaust administrative remedies, and they lack Article III standing to skip to review of the merits (Brief on the Merits (Max Midstream, LLC), PDF pp. 72-75, 79). ## Stated Reasons the Court Should Take the Case The petitioners argued that the case presents an important question of administrative law about the standard and scope of review of a denial of a contested-case hearing that no evidentiary hearing preceded, that *City of Waco* does not control, and that allowing TCEQ to resolve disputed facts at the standing stage under deferential review leaves affected people with no meaningful recourse (Petition for Review (Petitioner), PDF pp. 13-14). ## Practice Area Tags environmental-law, administrative-law ## Procedural Posture/Vehicle Petition for review from the Fifteenth Court of Appeals; granted June 19, 2026. Oral argument: January 11, 2027. ## Amicus Involvement Calhoun Port Authority filed an amicus response opposing review (Response to Petition (Amicus Curiae), PDF pp. 5, 9); the docket shows other amicus briefs received September 29, 2025 and June 1 and 9, 2026, which are not summarized here. --- Source: The SCOTX Report, https://scotxreport.com/cases/25-0564. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.