Texas Supreme Court Agrees to Hear Two Environmental Cases

The Texas Supreme Court has begun identifying the cases that it will hear in its 2017-2018 term.  One case involves an individual’s personal liability for violating environmental rules; another addresses state pre-emption of local environmental ordinances.

Individual Liability of LLC’s Owner and Manager

First, the Court agreed to review Morello v. State, where the Austin Court of Appeals held that Morello’s position as manager of a limited liability company (“LLC”) did not make him personally liable for the LLC’s failures to comply with TCEQ’s rules.  The Austin Court determined that the State did not plead or prove that it could “pierce the veil” of the LLC, nor did the State prove that Morello had personally violated any permit or TCEQ rule.

Must the State Prove Fraud or Environmental Tort for Personal Liability?

The State claims that Morello’s individual actions, including the removal of monitoring and treatment equipment necessary to comply with a TCEQ Compliance Plan, constituted personal violations of TCEQ’s rules.  Morello owned and managed the LLC that owned the facility subject to the Compliance Plan.  However, the Austin Court held that Morello could not be personally liable for these actions, unless the State pleaded and proved that Morello’s actions were fraud or an environmental tort.  A prior Alert provides more detail on the Austin court’s decision.

Oral argument is set for December 7, 2017; I expect a decision before July 31, 2018.

State Law Pre-Emption of Local Environmental Ordinances

Second, the Court agreed to review Laredo Merchants Association v. City of Laredo, where the San Antonio Court of Appeals ruled that the Texas Solid Waste Disposal Act (“SWDA”) pre-empted Laredo’s ordinance banning the use of plastic or one-time use paper check-out bags.

Just last year, the Texas Supreme Court found pre-emption based on the Texas Clean Air Act and struck the City of Houston’s air quality ordinance in BCCA Appeal Group v City of Houston.  I discussed that decision in a prior Alert.  The Texas Supreme Court has again agreed to hear a pre-emption case related to environmental regulation.

Does the SWDA Pre-Empt Laredo’s Check-Out Bag Ban?

At issue in Laredo is the SWDA provision that forbids local governments from prohibiting or restricting, for solid waste management purposes, sale or use of a container or package in a manner not authorized by state law.  The Laredo Merchants oppose the ordinance, and claim it is forbidden by the SDWA provision.  The City argues that the SWDA provision was never intended to cover and does not explicitly apply to bans on retail check-out bags.

In Laredo, each side is supported by multiple “friend of the court” briefs.  Oral argument is set for January 11, 2018; I expect a decision before July 31, 2018.

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