Mont Belvieu Caverns, LLC v. Texas Commission on Environmental Quality
2012 Tex. App. LEXIS 6458
Tex. App.2012Background
- Mont Belvieu appeals a final summary judgment denying its claim for the pollution-control tax exemption for a North Storage brine-pond system.
- Statutory framework allows an exemption for pollution-control property under Tax Code §11.31, with a two-stage process: use determinations by TCEQ and then exemptions with local appraisal.
- 2002 Rules created a Predetermined Equipment List (PDL) and tiers for determining the pollution-control percentage; PDL later replaced by the Equipment and Categories List (ECL) in 2008, affecting determinations.
- Mont Belvieu sought a 100% Tier I determination under category S-20 (brine storage ponds) but the executive director issued a negative determination, stating the system is production equipment not pollution-control property.
- Mont Belvieu pursued judicial review; discovery motions were denied; district court granted TCEQ’s cross-motion for partial summary judgment, resulting in a final judgment for TCEQ.
- This appeal challenges the district court’s summary-judgment ruling and its denial of discovery, arguing the ECL retroactively alters rights and misclassifies the brine-pond system.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TCEQ’s denial of 100% pollution-control status was arbitrary or capricious | Mont Belvieu argues the brine-pond system is wholly pollution-control property under §11.31(a)-(b) | TCEQ contends the system is not wholly pollution-control and the ECL correctly distinguishes pollution-control from production use | No; TCEQ’s decision aligning with the statute and rules was not arbitrary or capricious. |
| Whether the district court abused discovery discretion | Discovery should reveal why past 100% determinations were granted and how ECL was applied | Claims are mainly legal; discovery not aided since record governs judicial review | No; discovery denial was proper given the legal/record-based issues. |
Key Cases Cited
- City of Waco v. Texas Comm’n on Envtl. Quality, 346 S.W.3d 781 (Tex. App.‑Austin 2011) (arbitrary-and-capricious review framework for agency decisions)
- Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248 (Tex. 1999) (standard for reviewing agency decisions; deference when interpreting agency rules)
- Public Util. Comm’n v. Gulf States Utils. Co., 809 S.W.2d 201 (Tex. 1991) (deference to agency interpretation of its own rules)
- Tennessee Gas Pipeline Co. v. Ry-lander, 80 S.W.3d 200 (Tex. App.-Austin 2002) (construction of administrative rules; burden on interpretation)
- Ex parte Abell, 613 S.W.2d 255 (Tex. 1981) (no vested right in continuation of existing law or method for tax exemptions)
- General Dynamics Corp. v. Sharp, 919 S.W.2d 861 (Tex. App.-Austin 1996) (vesting rights; retroactivity principles applied to administrative rules)