Texas overrides local lawsuits to negotiate smaller settlements with polluters, Harris County officials claim

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It wasn’t immediately clear what chemicals erupted into the air from the Channelview fire. The most anyone knew was that the large plume of black smoke billowing across the late afternoon sky — visible for miles just east of Houston — had triggered evacuations and a shelter-in-place for the nearby community of Lakeside Park Estates.

Only later, after the fire had burned for more than two hours, did residents learn what had happened. In early April 2021, an accident at K-Solv, a chemical distribution and maritime services company, started a chemical fire that sent more than 165,000 pounds of 43 different pollutants into the atmosphere, including several known to be hazardous to human health. The company then failed to notify the Texas Commission on Environmental Quality within 24 hours after the emissions event — a requirement under state law.

County experts estimated a maximum penalty of $1.175 million for the company for these two violations. To the alarm of Harris County officials, residents and environmental advocates, however, the TCEQ settled for $11,413 — less than 1% of that.

“You could imagine our surprise when the state of Texas settles for just that,” Harris County Attorney Christian Menefee said. “I can’t tell anyone what we wouldn’t have settled for as the county, but, you know, my lawyers are pretty damn good and they’re pretty aggressive, and I’m more than confident that $11,000 would not have been sufficient.”

The K-Solv settlement was not the first time Menefee and his environmental team found themselves at cross purposes with the state. For the past seven years, the TCEQ and Texas Attorney General Ken Paxton’s office have intervened in more than a third of civil penalty cases against Houston’s petrochemical industry under a 2017 state law that allows the state to take county cases. Residents, advocates and the county say this policy is just one of many restrictions aimed at shrinking local power, reducing settlement penalties and taking penalties from the county and communities affected.

Since House Bill 2533 passed, the state can take environmental civil penalty cases within 90 days of the emissions event, barring local governments, individuals, or nonprofits from filing suit instead. That means any local entity must notify the executive director of the TCEQ and the attorney general before suing. The TCEQ and attorney general’s office will then decide whether to take it on — with no say from local officials.

The bill’s author, state Rep. Charlie Geren, R-Fort Worth, who did not respond to repeated requests for comment, said during the initial hearing for the bill in 2017 that local actions “are contrary to statewide enforcement policy and interpretations” and that local governments are “motivated by the desire to not remedy the environmental problem, but to generate attorney fee awards to the share of penalty recoveries.”

Since the bill passed, critics have pointed out that several of the cases taken by the state have ended in settlements of less than 10% of the maximum penalty, which Menefee sees as a way to benefit industry and weaken local enforcement.

“Even under my predecessor, this office has always been very active in pursuing these cases,” Menefee said. “But now, if a company is on the hook for millions of dollars and you settle with them for just a few thousand dollars, what incentive does the company have to scour their process and make sure they’re going to be most protective to the surrounding communities?”

Stripping away local control

In 2015, to the frustration of some state leaders, Harris County and Fort Bend County sued Volkswagen for installing technology designed to bypass emissions monitoring in a multi-billion-dollar national scandal.

The counties sued two weeks before the state of Texas and ultimately refused to drop their cases at the request of Paxton.

The resulting battle between the state and counties, along with other high-penalty county lawsuits against Intercontinental Company and Arkema after Hurricane Harvey, led Geren and other officials to push for the legislative change. The bill, Geren asserted in a hearing, would prevent another Volkswagen fight and keep enforcement policy consistent across Texas.

“It went from some initial restrictions to where the attorney general’s office was basically in control of everything and sort of squeezed the county out,” said William Rock Owens, a retired attorney with Harris County. “It made it absolutely impossible to do anything without the absolute approval of the attorney general’s office.”

In 2011, the Legislature passed a bill requiring state agencies to receive approval from the attorney general’s office before hiring outside counsel to assist in cases.

Then, in 2015, the Legislature passed a bill that limited the amount of penalty money from environmental cases that a county could collect. The bill, also authored by Rep. Geren, cut the county off at $4.3 million, with the remaining balance going to the state general fund.

Owens, who retired from the county in 2019 after nearly 40 years, said the increasing restrictions contributed to his leaving when he did. He found it frustrating and exhausting to see the county slowly lose agency.

“Outside counsel could help us be more effective in cases,” said Owens. “But every time we found a way to do something that could ratchet down on industry or something, the state would make it harder for us.”

That has been particularly true since the 2017 bill. The county must send a notice to the state laying out its case and how many violations it may pursue. The state then has 90 days to review the documentation and decide whether to take the case or allow local authorities to proceed. The county cannot advance the case until that determination is made.

Should the state decide to take the case, it will file through TCEQ administrative court or district court with the attorney general’s office.

Asked about the criteria for selecting cases to take, the TCEQ responded, “The agency reviews each request by local governments to file suit on a case-by-case basis in consultation with its attorney at the Office of the Attorney General.”

However, the TCEQ said the agency does not keep track of the number of cases taken from any local government, including Harris County

The attorney general’s office did not respond to requests for comment.

Issues with penalties

In the case of the K-Solv fire, the TCEQ considered all 43 pollutants as a single violation rather than 43 different violations — each worth a maximum of $25,000 a day. With one violation on one day, lasting less than 3 hours, the agency landed on a penalty of a little more than $11,000.

The TCEQ does not speciate or separate each pollutant as a different violation, said Sarah Utley, an assistant Harris County attorney specializing in environmental cases. That lowers the total potential penalty significantly at the outset.

“This is one of the biggest differences between the TCEQ and us and district court,” Utley said. “District court (in Travis County) and county will seek a different penalty for each pollutant discharged. The TCEQ doesn’t do that. Their penalty numbers are always pretty low.”

In one 2018 case, the TCEQ settled with the chemical manufacturing company Kuraray for more than $8,000 out of a maximum possible penalty of $150,000.

In another 2021 emissions case, the TCEQ penalized VSL Environmental Solutions, a waste management and marine services company, $11,250 from a possible maximum of $300,000.

While emissions cases that go to district court are separated, the total penalties can also be far lower than the maximum. An 2019 explosion and fire at the Exxon Baytown complex resulted in 770 violations from 14 different pollutants over five days.

District court settled for just $755,000 — just 4% of the $19.25 million potential maximum penalty.

“People need to understand that these cases are not small, these are large cases,” Utley said. “The state isn’t going after the little ones. It’s not like you have a little facility that has a little emissions event; these are big cheeses.”

Even with low penalty settlements, another concern for critics of the bill is the money collected by the state will then go to the state general revenue rather than the county general fund or any individuals who want to file legal action.

That means the penalty collected from the local petrochemical industry in Houston could end up miles away in Austin rather than in the hands of the local government or local communities, said Cyrus Reed, conservation director for the Sierra Club’s Texas Lone Star Chapter.

While the penalties the county receives go to the Harris County general fund, Menefee said that the money should be sent to environmental protection, such as Harris County Pollution Control and the County Attorney’s Office.

Menefee also points to the expansion of his office as proof of the local government’s prioritization of environmental concerns. Since he took office in 2019, the environmental team has jumped from six attorneys and three paralegals to 13 attorneys and four paralegals.

Reed spoke against the bill at the hearing in 2017 and now, in 2024, his opinion hasn’t changed. He points to the 20 lobbyists and industry groups who supported the bill initially as proof of the issue. The list includes groups like the Texas Chemical Council, Texas Oil and Gas Association, Texas Association of Business and the Texas Association of Manufacturers. None responded to requests for comment.

“Given the significant political support that large industry has in Texas, it could mean a less aggressive civil suit or less penalties and less favorable outcome for communities,” Reed said.

Citizen complaints

While it is legal for private citizens and nonprofits to sue polluting companies in state court, the best outcomes typically come from the Clean Air Act Citizen Suit Provision. This rule, passed by President Richard Nixon in 1970, allows any person to file a lawsuit in federal court for an emissions event.

However, the TCEQ and attorney general’s office can interfere there, as well. If the state files a similar suit, alleging the same environmental emissions issues, the individual’s claim can not proceed. The state has 60 days to take the case — again stripping the community of local action and potential penalty money.

“It’s extremely difficult to file a lawsuit at state court against a polluter in Texas, it’s expensive and complicated. HB 2533 really is about the county,” said Neil Carman, clean air director for the Sierra Club and retired TCEQ regulator. “(Nonprofits) and citizens will go through federal court, but even then, the TCEQ will do the same thing.”

In July 2019, the TCEQ took a case from Sierra Club that alleged 600 violations of Valero Oil Refinery in Port Arthur and the release of almost 1.8 million pounds of unauthorized pollution.

“The Texas AG and TCEQ filed in Travis County in mid-July to stop our mid-July citizen suit,” Carman said. “Their lawsuit was a word-for-word, cookie-cutter version of our 60-day notice filed with Valero.”

In other cases, however, the community citizen complaints resulted in millions of dollars in penalties donated to public health and environmental projects in the community. In 2009, nonprofits Sierra Club and Environment Texas successfully sued Shell Oil Company for “upset” events, such as equipment breakdowns and malfunctions in at the company’s Deer Park oil refinery and chemical plant.

The resulting $5.8 million penalty funded environmental and health projects in Harris County, including replacing school buses with ones with cleaner engines and a solar energy demonstration project by the Houston Advanced Research Center.

“In both cases (HB 2533 and Federal), the state is cutting off the community,” Carman said. “It’s just a matter of how they are doing it.”

Disclosure: Houston Advanced Research Center, the Texas Association of Business and Valero and have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.