86R22186 SLB-F
 
  By: Kacal H.B. No. 3114
 
  Substitute the following for H.B. No. 3114:
 
  By:  Lozano C.S.H.B. No. 3114
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to contested case hearings on matters under the
  jurisdiction of the Texas Commission on Environmental Quality.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. CONTESTED CASE HEARINGS
         SECTION 1.01.  Section 5.001, Water Code, is amended by
  amending Subdivision (1) and adding Subdivision (1-a) to read as
  follows:
               (1)  "Administrative law judge" means an individual who
  presides at an administrative hearing held under Subchapters H and
  H-1.
               (1-a)  "Board" means the Texas Water Development Board.
         SECTION 1.02.  Subchapter D, Chapter 5, Water Code, is
  amended by adding Section 5.1101 to read as follows:
         Sec. 5.1101.  ADMINISTRATIVE LAW JUDGES. (a)  The
  commission may employ or contract with administrative law judges to
  assist the commission in carrying out the duties of the commission
  under this code and other law.
         (b)  Administrative law judges are independent of the
  executive director of the commission.
         SECTION 1.03.  Section 5.228(c), Water Code, is amended to
  read as follows:
         (c)  The executive director shall participate as a party in
  contested case permit hearings before the commission [or the State
  Office of Administrative Hearings] to:
               (1)  provide information to complete the
  administrative record; and
               (2)  support the executive director's position
  developed in the underlying proceeding, unless the executive
  director has revised or reversed that position.
         SECTION 1.04.  The heading to Subchapter H, Chapter 5, Water
  Code, is amended to read as follows:
  SUBCHAPTER H. [DELEGATION OF] HEARINGS
         SECTION 1.05.  Subchapter H, Chapter 5, Water Code, is
  amended by adding Sections 5.301, 5.302, and 5.310 to read as
  follows:
         Sec. 5.301.  POWERS OF ADMINISTRATIVE LAW JUDGE. (a) An
  administrative law judge employed by the commission or a temporary
  administrative law judge may:
               (1)  administer an oath;
               (2)  take testimony;
               (3)  rule on a question of evidence;
               (4)  issue an order relating to discovery or another
  hearing or prehearing matter, including an order imposing a
  sanction;
               (5)  issue an order that refers a case to an alternative
  dispute resolution procedure, determines how the costs of the
  procedure will be apportioned, and appoints an impartial third
  party as described by Section 2009.053, Government Code, to
  facilitate that procedure;
               (6)  issue a proposal for decision that includes
  findings of fact and conclusions of law; and
               (7)  serve as an impartial third party as described by
  Section 2009.053, Government Code, for a dispute referred by the
  commission or an administrative law judge, unless one of the
  parties objects to the appointment.
         (b)  An administrative law judge may not serve as an
  impartial third party for a dispute that the administrative law
  judge refers to an alternative dispute resolution procedure.
         Sec. 5.302.  EX PARTE CONSULTATIONS. (a) Except as provided
  by Subsection (b), the provisions of Section 2001.061, Government
  Code, apply in relation to a matter before the commission without
  regard to whether the matter is considered a contested case under
  this chapter.
         (b)  The provisions of Section 2001.061, Government Code, do
  not apply to a matter before the commission to the extent that the
  commission is conducting an alternative dispute resolution
  procedure in relation to the matter. The commission shall adopt
  rules that prescribe the types of alternative dispute resolution
  procedures in which ex parte consultations are prohibited and the
  types of alternative dispute resolution procedures in which ex
  parte consultations are allowed. For alternative dispute
  resolution procedures in which ex parte consultations are
  prohibited, the commission in adopting rules under this subsection
  shall model the prohibition after Section 2001.061, Government
  Code, but may vary the extent of the prohibition if necessary to
  take into account the nature of alternative dispute resolution
  procedures.
         Sec. 5.310.  APPLICABILITY.  This subchapter applies to
  hearings held for matters under the jurisdiction of the commission.
         SECTION 1.06.  Section 5.311, Water Code, is amended to read
  as follows:
         Sec. 5.311.  DELEGATION OF RESPONSIBILITY. (a)  The
  commission may delegate to an administrative law judge employed or
  contracted by [of] the commission [State Office of Administrative
  Hearings] the responsibility to hear any matter before the
  commission.
         (b)  The [Except as provided in Subsection (a), the]
  administrative law judge shall report to the commission on the
  hearing in the manner provided by law.
         SECTION 1.07.  Section 5.312(a), Water Code, is amended to
  read as follows:
         (a)  Except as provided in Subsection (b) and otherwise in
  this subchapter and Subchapter H-1, all permit decisions shall be
  made within 180 days of the receipt of the permit application or
  application amendment or the determination of administrative
  completeness, whichever is later.
         SECTION 1.08.  Section 5.315, Water Code, is amended to read
  as follows:
         Sec. 5.315.  DISCOVERY IN CASES USING PREFILED WRITTEN
  TESTIMONY. In a contested case hearing delegated by the commission
  to an administrative law judge [the State Office of Administrative
  Hearings] that uses prefiled written testimony, all discovery must
  be completed before the deadline set by the administrative law
  judge for the submission of that testimony in accordance with
  Section 5.318.
         SECTION 1.09.  Subchapter H, Chapter 5, Water Code, is
  amended by adding Sections 5.316 through 5.325 to read as follows:
         Sec. 5.316.  HEARING BEFORE COMMISSION; APPLICABILITY OF
  OTHER LAW.  (a)  An administrative law judge to whom the commission
  has delegated a contested case hearing shall conduct the hearing.
         (b)  The provisions of Chapter 2001, Government Code, apply
  to contested case hearings for the commission to the extent not
  inconsistent with this subchapter.
         Sec. 5.317.  ADMINISTRATIVE LAW JUDGES. (a)  The commission
  may employ or contract with qualified individuals to serve as
  temporary or permanent administrative law judges or technical
  advisors as necessary.
         (b)  To be eligible to preside at a hearing on behalf of the
  commission, an administrative law judge, regardless of temporary or
  permanent status, must:
               (1)  be licensed to practice law in this state; and
               (2)  have the expertise necessary to conduct hearings
  regarding technical or other specialized subjects that may come
  before the commission.
         Sec. 5.318.  HEARING TIMELINES. (a)  The commission shall
  specify the date by which the administrative law judge is expected
  to complete the proceeding and provide a proposal for decision to
  the commission. The administrative law judge may extend the
  proceeding if the administrative law judge determines that failure
  to grant an extension would deprive a party of due process or
  another constitutional right. The administrative law judge shall
  establish a procedural scheduling order designed to complete the
  proceeding by the date specified by the commission.
         (b)  For a matter relating to an application described by
  Section 11.122(b-1), the administrative law judge must complete the
  proceeding and provide a proposal for decision to the commission
  not later than the 270th day after the date the commission's interim
  order was signed.
         (c)  The timeline specified by Subsection (b) may be
  extended:
               (1)  by agreement of the parties with the approval of
  the administrative law judge; or
               (2)  by the administrative law judge if the judge
  determines that failure to extend the timeline would unduly deprive
  a party of due process or another constitutional right.
         Sec. 5.319.  SCOPE OF HEARING. In delegating a matter for
  hearing, the commission shall provide to the administrative law
  judge a list of specified issues.  Except as otherwise provided by
  this section, the scope of the hearing is limited to the issues
  specified by the commission. On the request of a party, the
  administrative law judge may consider an issue that was not
  specified by the commission if the administrative law judge
  determines that:
               (1)  the issue is material;
               (2)  the issue is supported by evidence; and
               (3)  there are good reasons for the failure to supply
  available information regarding the issue during the public comment
  period.
         Sec. 5.320.  DISCOVERY.  (a)  The scope of permissible
  discovery is limited to:
               (1)  any matter that:
                     (A)  is reasonably calculated to lead to the
  discovery of admissible evidence regarding any issue;
                     (B)  is specified by the commission; or
                     (C)  the administrative law judge has agreed to
  consider; and
               (2)  the production of documents:
                     (A)  reviewed or relied on in preparing
  application materials or selecting the site of the proposed
  facility; or
                     (B)  relating to the ownership of the applicant or
  the owner or operator of the facility or proposed facility.
         (b)  The commission by rule shall:
               (1)  provide for subpoenas and commissions for
  depositions; and
               (2)  require that discovery be conducted in accordance
  with the Texas Rules of Civil Procedure, except that the commission
  by rule shall determine the level of discovery under Rule 190, Texas
  Rules of Civil Procedure, appropriate for each type of case
  considered by the commission, taking into account the nature and
  complexity of the case.
         Sec. 5.321.  CERTIFICATION OF ISSUES.  The commission shall
  adopt rules providing for certification to the commission of an
  issue that involves an ultimate finding of compliance with or
  satisfaction of a statutory standard the determination of which is
  committed to the discretion or judgment of the commission by law.
  The rules must address, at a minimum:
               (1)  the issues that are appropriate for certification;
  and
               (2)  the procedure to be used in certifying an issue.
         Sec. 5.322.  SANCTIONS. (a)  An administrative law judge
  hearing a case on behalf of the commission, on the judge's own
  motion or on motion of a party and after notice and an opportunity
  for a hearing, may impose appropriate sanctions as provided by
  Subsection (b) against a party or its representative for:
               (1)  filing a motion or pleading that is groundless and
  brought:
                     (A)  in bad faith;
                     (B)  for the purpose of harassment; or
                     (C)  for any other improper purpose, such as to
  cause unnecessary delay or needless increase in the cost of the
  proceeding;
               (2)  abuse of the discovery process in seeking, making,
  or resisting discovery; or
               (3)  failure to obey an order of the administrative law
  judge or the commission.
         (b)  A sanction imposed under Subsection (a) may include, as
  appropriate and justified, issuance of an order:
               (1)  disallowing further discovery of any kind or of a
  particular kind by the offending party;
               (2)  charging all or any part of the expenses of
  discovery against the offending party or its representatives;
               (3)  holding that designated facts be considered
  admitted for purposes of the proceeding;
               (4)  refusing to allow the offending party to support
  or oppose a designated claim or defense or prohibiting the party
  from introducing designated matters into evidence;
               (5)  wholly or partly disallowing requests for relief
  by the offending party and excluding evidence in support of those
  requests; and
               (6)  wholly or partly striking pleadings or testimony,
  or both.
         Sec. 5.323.  PROPOSAL FOR DECISION. (a)  After hearing
  evidence and receiving legal argument, an administrative law judge
  shall:
               (1)  separately state findings of fact, conclusions of
  law, and any ultimate findings required by statute; and
               (2)  make a proposal for decision to the commission and
  serve the proposal for decision on all parties.
         (b)  An opportunity shall be given to each party to file
  exceptions to the proposal for decision and briefs related to the
  issues addressed in the proposal for decision.
         (c)  The commission shall consider and act on the proposal
  for decision.
         Sec. 5.324.  COMMISSION CONSIDERATION OF AND ACTION ON
  PROPOSAL FOR DECISION.  (a)  Except as provided by Section 361.0832,
  Health and Safety Code, the commission shall consider the proposal
  for decision prepared by the administrative law judge, the
  exceptions of the parties, and the briefs and argument of the
  parties.
         (b)  The commission may amend the proposal for decision,
  including any finding of fact, but an amendment to the proposal for
  decision and order must be based solely on the record made before
  the administrative law judge. An amendment by the commission must
  be accompanied by an explanation of the basis of the amendment.
         (c)  The commission may return the matter back to the
  administrative law judge to:
               (1)  reconsider any findings and conclusions set forth
  in the proposal for decision; or
               (2)  take additional evidence or to make additional
  findings of fact or conclusions of law.
         (d)  The commission shall issue its decision and order in
  accordance with Subchapter F, Chapter 2001, Government Code.
         Sec. 5.325.  ALTERNATIVE DISPUTE RESOLUTION. (a)  On a joint
  motion agreed to by all parties, an administrative law judge
  hearing a case on behalf of the commission may issue an order
  referring the case to an alternative dispute resolution procedure.
         (b)  If the commission has not already conducted an
  alternative dispute resolution procedure, the administrative law
  judge shall consider the commission's recommendation in
  determining whether to issue an order referring the case to the
  procedure.
         SECTION 1.10.  Chapter 5, Water Code, is amended by adding
  Subchapter H-1 to read as follows:
  SUBCHAPTER H-1. HEARINGS ON CERTAIN APPLICATIONS
         Sec. 5.340.  APPLICABILITY.  This subchapter applies to
  contested cases regarding permit applications:
               (1)  filed on or after September 1, 2015; and
               (2)  referred to hearing under Section 5.555 or 5.557.
         Sec. 5.341.  HEARING TIMELINES. (a)  An administrative law
  judge shall complete a proceeding to which this subchapter applies
  and provide a proposal for decision to the commission not later than
  the earlier of:
               (1)  the 180th day after the date of the preliminary
  hearing; or
               (2)  the date specified by the commission.
         (b)  The timeline specified by Subsection (a) or Section
  5.318, as applicable, may be extended:
               (1)  by agreement of the parties with the approval of
  the administrative law judge; or
               (2)  by the administrative law judge if the judge
  determines that failure to extend the timeline would unduly deprive
  a party of due process or another constitutional right.
         (c)  For the purposes of Subsection (b)(2), a political
  subdivision has the same constitutional rights as an individual.
         (d)  This subsection applies only to a matter sent to hearing
  under Section 5.557. The administrative law judge may not hold a
  preliminary hearing until after the executive director has issued a
  response to public comments under Section 5.555.
         Sec. 5.342.  SCOPE OF HEARING. This section applies only to
  a matter referred to hearing under Section 5.556. Each issue
  specified by the commission for hearing must have been raised by an
  affected person in a comment submitted by that affected person in
  response to a permit application in a timely manner. The list of
  issues provided must:
               (1)  be detailed and complete; and
               (2)  contain either:
                     (A)  only factual questions; or
                     (B)  mixed questions of fact and law.
         Sec. 5.343.  PRIMA FACIE DEMONSTRATION.  (a)  In a contested
  case regarding a permit application to which this subchapter
  applies, the filing with the administrative law judge of the
  application, the draft permit prepared by the executive director,
  the preliminary decision issued by the executive director, and
  other sufficient supporting documentation in the administrative
  record of the permit application establishes a prima facie
  demonstration that:
               (1)  the draft permit meets all state and federal legal
  and technical requirements; and
               (2)  a permit, if issued consistent with the draft
  permit, would protect human health and safety, the environment, and
  physical property.
         (b)  A party may rebut a demonstration under Subsection (a)
  by presenting evidence that:
               (1)  relates to a matter sent to hearing under Section
  5.557, or an issue included in a list submitted under Section 5.342
  in connection with a matter specified under Section 5.556; and
               (2)  demonstrates that one or more provisions in the
  draft permit violate a specifically applicable state or federal
  requirement.
         (c)  If in accordance with Subsection (b) a party rebuts a
  presumption established under Subsection (a), the applicant and the
  executive director may present additional evidence to support the
  draft permit.
         SECTION 1.11.  Sections 5.556(d) and (e), Water Code, are
  amended to read as follows:
         (d)  The commission may not specify [refer] an issue to be
  heard at a contested case [the State Office of Administrative
  Hearings for a] hearing unless the commission determines that the
  issue:
               (1)  involves a disputed question of fact;
               (2)  was raised during the public comment period; and
               (3)  is relevant and material to the decision on the
  application.
         (e)  If the commission grants a request for a contested case
  hearing it shall:
               (1)  limit the number and scope of the issues to be
  specified [referred to the State Office of Administrative Hearings]
  for a hearing; and
               (2)  consistent with the nature and number of the
  issues to be considered at the hearing, specify the maximum
  expected duration of the hearing.
         SECTION 1.12.  Section 5.557(b), Water Code, is amended to
  read as follows:
         (b)  Sections 5.318, 5.319, 5.554, 5.555, and 5.556 [of this
  code and Sections 2003.047(e) and (f), Government Code,] do not
  apply to an application referred for a hearing under Subsection
  (a).
  ARTICLE 2. CONFORMING AMENDMENTS
         SECTION 2.01.  Section 2003.024(d), Government Code, is
  amended to read as follows:
         (d)  This section does not apply to hearings conducted:
               (1)  under Section [2003.047 or] 2003.049; or
               (2)  under the administrative license revocation
  program.
         SECTION 2.02.  Section 2003.025(a), Government Code, is
  amended to read as follows:
         (a)  This section applies to a state agency that has entered
  into a contract with the office for the conduct of hearings and
  alternative dispute resolution procedures for the agency,
  including a contract under Section 2003.024, [2003.048,] 2003.049,
  or 2003.105, during any of the three most recent state fiscal years.
         SECTION 2.03.  Section 2003.0421(c), Government Code, is
  amended to read as follows:
         (c)  This section applies to any contested case hearing
  conducted by the office, except hearings conducted on behalf of
  [the Texas Commission on Environmental Quality or] the Public
  Utility Commission of Texas which are governed by Section [Sections
  2003.047 and] 2003.049.
  ARTICLE 3. REPEALER
         SECTION 3.01.  The following provisions are repealed:
               (1)  Section 2003.047, Government Code;
               (2)  Section 2003.048, Government Code; and
               (3)  Section 5.313, Water Code.
  ARTICLE 4. TRANSITION; EFFECTIVE DATE
         SECTION 4.01.  Not later than September 1, 2020, the Texas
  Commission on Environmental Quality shall adopt rules to implement
  the changes in law made by this Act.
         SECTION 4.02.  As soon as practicable after the effective
  date of this Act, the chief administrative law judge of the State
  Office of Administrative Hearings and the executive director of the
  Texas Commission on Environmental Quality shall enter into a
  memorandum of understanding to:
               (1)  determine the number of administrative law judges
  necessary to conduct hearings for the Texas Commission on
  Environmental Quality effectively and other details related to the
  qualification and requirements of those administrative law judges;
               (2)  make the necessary changes in the State Office of
  Administrative Hearings to implement the changes in law made by
  this Act; and
               (3)  arrange for the transfer from the State Office of
  Administrative Hearings to the Texas Commission on Environmental
  Quality all equipment, data, facilities, and other items related to
  hearings conducted on behalf of the commission, to occur not later
  than September 1, 2020.
         SECTION 4.03.  The changes in law made by this Act apply only
  to a contested case hearing referred by the Texas Commission on
  Environmental Quality to an administrative law judge on or after
  September 1, 2020. A contested case hearing referred by the Texas
  Commission on Environmental Quality to an administrative law judge
  before September 1, 2020, is governed by the law in effect at the
  time the case was referred, and the former law is continued in
  effect for that purpose.
         SECTION 4.04.  This Act takes effect September 1, 2019.