Petition for Writ of Certiorari — AC Interests, L.P., Petitioner v. Texas Commission on Environmental Quality

Supreme Court briefJul 16, 2022

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NO. 22-_____

In the

Supreme Court of the United States

AC INTERESTS, L.P.,

Petitioner,

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY,

Respondent.

__________________________

On Petition for a Writ of Certiorari to the

Texas Supreme Court

PETITION FOR A WRIT OF CERTIORARI

C. WILLIAM SMALLING

COUNSEL OF RECORD

THE LAW OFFICE OF C. WILLIAM

SMALLING, PC

700 MILAM STREET, SUITE 1300

HOUSTON, TX 77002

(713) 353-3920

BSMALLING@BILLSMALLINGLAW.COM

JULY 15, 2022

SUPREME COURT PRESS

COUNSEL FOR PETITIONER

♦

(888) 958-5705

♦

BOSTON, MASSACHUSETTS

QUESTIONS PRESENTED

Petitioner AC Interests, L.P. applied for emission reduction credits established by the 1990 Federal

Clean Air Act to the Texas Commission on Environmental Quality (TCEQ). While 97.3% of federally

approved air pollution control programs have a 10year to unlimited lifetime, TCEQ limits them to a

5-year life. In the course of litigation, which traveled

once up to the Texas Supreme Court before remand,

TCEQ argued that the 60-month time limit had expired.

The Texas courts’ denied Petitioner’s argument that

the 60-month deadline should have been equitably

tolled while the rights to these credits were being

litigated. The Questions Presented are:

1. Should Common Law allow the 60-month

deadline for using emission reduction credits to be

equitably tolled while a party seeks to establish the

right to those credits in the trial and appellate courts?

2. Whether the Due Process Clause of the Fifth

and Fourteenth Amendments allows the 60-month

deadline for using emission reduction credits to be

tolled while a party seeks to establish the right to

those credits in trial and appellate courts?

3. Whether the TCEQ’s 60-month Emission Credit

“lifetime” is in violation of the Federal Clean Air Act?

4. Whether the “mootness” determination by the

Texas Supreme Court and First Court of Appeals

violates AC Interests’ Due Process rights under the

Fifth and Fourteenth Amendments?

5. Whether the $2,715,600 Emission Credit value

that the TCEQ cost AC Interests is a “Taking” under

the Takings Clause of the Fifth Amendment?

LIST OF PROCEEDINGS

Supreme Court of Texas

Case No. 21-0078

AC Interests, L.P. v. Tex. Comm’n on Envtal. Quality

Date of Final Order: February 18, 2022

Date of Rehearing Denial: April 22, 2022

_________________

Court of Appeals for the First District of Texas

No. 01-19-00387-CV

AC Interests, L.P., Formerly American Coatings,

L.P., Appellant, v. Texas Commission on

Environmental Quality, Appellee.

Date of Final Opinion: December 17, 2020

_________________

District Court of Travis County, Texas, 345th

Judicial District

No. D-1-GN-14-005160

AC Interests, L.P., Formerly American Coatings,

L.P., Plaintiff, v. Texas Commission on

Environmental Quality, Defendant.

Date of Final Order: April 26, 2019

_________________

Supreme Court of Texas

No. 16-0260

AC Interests, L.P. v. Tex. Comm’n on Envtal. Quality

Date of Final Opinion: March 23, 2018

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ........................................ i

LIST OF PROCEEDINGS .......................................... ii

TABLE OF AUTHORITIES ...................................... vi

OPINIONS BELOW ................................................... 1

JURISDICTION.......................................................... 1

CONSTITUTIONAL PROVISIONS INVOLVED...... 2

INTRODUCTION ....................................................... 3

STATEMENT OF THE CASE .................................... 4

REASONS FOR GRANTING THE PETITION ......... 8

THE COMMON LAW TOLLING DOCTRINE

APPLIES WHEN THERE IS A LEGAL IMPEDIMENT TO EXERCISING A LEGAL RIGHT

WITHIN THE LIMITATIONS PERIOD AND AC

INTERESTS’ DUE PROCESS RIGHTS UNDER

THE FIFTH AND FOURTEEN AMENDMENT WERE

VIOLATED .......................................................... 8

A. The Common Law Tolling Doctrine

Applies When There Is a Legal Impediment to Exercising a Legal Right Within

the Limitations Period ................................ 8

B. AC Interests’ Due Process Rights Under

the Fifth and Fourteen Amendment Were

Violated ..................................................... 13

1. AC Interests’ Property Interest .......... 14

2. AC Interests Has Been Deprived of

Due Process of Law and the Equal

Protection of the Laws......................... 14

TABLE OF CONTENTS – Continued

Page

C. Several State Supreme Courts Have

Issued Rulings on Either the Due Process

Clause or Equitable Tolling...................... 15

D. Each Federal Circuit Court Has Issued

Rulings on Either the Due Process Clause

or Equitable Tolling .................................. 19

II. WITHOUT TOLLING THE PURPOSE OF THE

CLEAN AIR ACTS WOULD BE FRUSTRATED ....... 28

III. THE CASE IS NOT MOOT .................................. 29

A. EMISSION CREDIT LIFE .............................. 29

B. EXCEPTIONS TO MOOTNESS DOCTRINE ....... 31

IV. TCEQ HAS ASSERTED THAT AC INTERESTS’

EMISSION CREDIT APPLICATION WAS DEFICIENT, WHICH CLAIM BY TCEQ IS INCORRECT ................................................................ 34

V. TCEQ WAIVED PLEA TO JURISDICTION

RIGHTS BY FILING A LATE PLEA TO

JURISDICTION .................................................. 34

VI. THE FACT THAT TOLLING IS NOT WRITTEN

INTO THE STATUTE IS NOT SIGNIFICANT

BECAUSE EQUITABLE TOLLING IS A COMMON

LAW DOCTRINE ................................................ 35

VII.

A LIMITATIONS PERIOD DOES NOT HAVE

TO PERTAIN TO THE RIGHT TO SUE .............. 36

VIII. FAR FROM GIVING ERCS AN “INFINITE

LIFE,” APPLYING TOLLING WOULD LIKELY

SHORTEN THE LENGTH OF LITIGATION AND

SUPPORT THE PURPOSE OF THE CLEAN AIR

ACT .............................................................. 37

TABLE OF CONTENTS – Continued

Page

CONCLUSION.......................................................... 38

APPENDIX TABLE OF CONTENTS

OPINIONS AND ORDERS

Order of the Texas Supreme Court Denying

Petition for Review (February 18, 2022) .................. 1a

Memorandum Opinion of the Court of Appeals,

First District of Texas (December 17, 2020) ............ 2a

Order Granting TCEQ Plea to Jurisdiction,

345th District Court, Travis County, Texas

(April 26, 2019) ....................................................... 20a

Opinion and Order of the Texas Supreme Court

Reversing and Remanding (March 23, 2018) ........ 22a

Dissenting Opinion of Justice Boyd, Joined by

Justice Johnson (March 23, 2018) ................... 44a

Entry of Judgment (March 23, 2018) .............. 63a

REHEARING DENIAL

Order of the Texas Supreme Court Denying

Motion for Rehearing oF Denial of Petition for

Review (April 22, 2022) .......................................... 65a

OTHER DOCUMENTS

Combined State ERC Summary Totals ................. 66a

TABLE OF AUTHORITIES

Page

CASES

TABLE OF AUTHORITIES

AC Interests, L.P. v. Tex. Comm’n on Envtl.

Quality, 543 S.W.3d 703 (Tex. 2018) ........ passim

AC Interests, L.P. v. Tex. Comm’n on Envtl.

Quality, No. 01-19-00387-CV, 2020 Tex.

App. LEXIS 9988 (Tex. App.—Houston

[1st Dist.] Dec. 17, 2020) (mem. op.) ................. 33

Alabama Republican Party v. McGinley,

893 So.2d 337 (Ala.2004)................................... 18

Cavitt v. Amsler,

242 S.W. 246 (Tex. Civ. App. 1922) ......... 10, 11, 36

Charles and Marion Hefti v. Commissioner of

Internal Revenue., 899 F.2d 709

(8th Cir. 1990) ................................................... 24

City of Hou. v. Kallinen,

516 S.W.3d (Tex. 2017) ..................................... 30

City Of New York et al. v. Margaret M.

Heckler, et al.,

742 F.2d 729 (2d Cir. 1984) ......................... 20, 21

City of Richmond, Et Als. v. Mary J.

Dervishian, Et Al., 190 Va. 398, Supreme

Court of Appeals of Virginia (Va. 1950) ..... 15, 16

Cloward v. United States Bank Tr., N.A.,

No. 05-18-01397-CV, 2020 Tex. App.

LEXIS 6107 (Tex. App.—Dallas Aug. 3,

2020, pet.filed) ......................................... 9, 10, 36

Cochran v. Holder,

564 F. 3d 318 (4th Cir. 2009) ............................ 22

vii

TABLE OF AUTHORITIES – Continued

Page

Commercial Life Insurance Company v. Texas

State Board of Insurance, 774 S.W.2d 650

(Tex.1989) .......................................................... 16

Cox Broad. Corp. v. Cohn,

420 U.S. 469 (1975) ............................................. 1

CTS Corporation v. Peter Waldburger et al.,

134 S.Ct. 2175 (2014) .......................................... 8

Daniel Senior Living of Inverness I, LLC v.

STV One Nineteen Senior Living, LLC,

161 So. 3d 196 (Ala. 2014) ..................... 16, 17, 18

Donald Fessenden v. Reliance Standard Life Ins.

Co. et al., 927 F.3d 998

(7th Cir. 2019) ............................................... 23, 24

Harriet Wilson v. The Standard Insurance

Company, 613 Fed. Appx. 841

(11th Cir. 2015) ................................................. 26

Hughes v. Mahaney & Higgins,

821 S.W.2d 154 (Tex. 1991)....................... passim

In The Matter of Contractor Technology, Ltd.,

et al. v. Century Asphalt Materials, LLC.,

529 F.3d 313 (5th Cir. 2008) ............................. 22

Irvin Bailey, on Behalf of Himself and All Others

Similarly Situated v. Louis W. Sullivan,

M.D., Secretary of Health and Human

Services of the United States of America, 885

F.2d 52 (3d Cir. 1981).......................................... 21

Jeremy E. Riley v. Immigration &

Naturalization Service, The District

Director, District 19, 310 F.3d 1253

(10th Cir. 2002) ................................................. 26

viii

TABLE OF AUTHORITIES – Continued

Page

Jerry Engleson, v. Unum Life Insurance

Company of America, et al., 723 F.3d 611

(6th Cir. 2013) ................................................... 22

Jordan Hospital, Inc. v. Donna E. Shalala,

etc., et al., 276 F.3d 72 (1st Cir. 2002) .............. 19

Laminators Safety Glass Association v.

Consumer Product Safety Commission,

578 F.2d 406 (DC Cir. 1978) ....................... 26, 27

Mathews v. Eldridge,

424 U.S. 319, 96 S.Ct. 893,

47 L.Ed.2d 18 (1976) ....................... 13, 15, 19, 20

Meador-Brady Management Corp. v. Texas

Motor Vehicle Comm’n, 866 S.W.2d 593

(Tex.1993) .......................................................... 16

Mono-Therm Industries, Incorporated et al. v.

Federal Trade Commission, 653 F.2d 1373

(10th Cir. 1981) ................................................. 25

Pioneer Bldg. & Loan Ass’n v. Johnston,

117 S.W.2d 556 (Tex. Civ. App.—Waco

1938) .................................................. 9, 11, 32, 36

Public Citizen Inc.; et al. v. Norman Y. Mineta,

et al., 343 F.3d 1159 (9th Cir. 2011) ................. 24

Shaffer v. Heitner,

433 U.S. 186 (1977) ............................................. 1

State v. Lodge,

608 S.W.2d 910 (Tex.1980).......................... 31, 32

Underkofler v. Vanasek,

53 S.W.3d 343 (Tex. 2001)..................... 12, 29, 35

TABLE OF AUTHORITIES – Continued

Page

Voices of the Wetlands v. State Water Resources

Control Board, et al,

52 Cal.4th 499 (Cal. 2011) ................................... 18

Walker v. Hanes,

570 S.W.2d 534 (Tex. Civ. App.-Corpus

Christi 1978) .................................................. 8, 36

Winthrop J. Block, Patrick M. Burns, Brenda

Iwasyk, David M. Jacobs and Verborie W.

Shaw, v. Secretary of Veterans Affairs, 641

F.3d 1313 (Fed. Cir. 2011) ............................. 27, 28

CONSTITUTIONAL PROVISIONS

U.S. Const. amend. V ....................................... i, 13, 14

U.S. Const. amend. XIV ......................................... i, 13

STATUTES

15 U.S.C. § 2058(a)(1, 2) ........................................... 27

15 U.S.C. § 2059 ........................................................ 27

15 U.S.C. § 2060 ........................................................ 27

28 U.S.C. § 1257(a) ..................................................... 1

28 U.S.C. § 1331 ........................................................ 21

28 U.S.C. § 2403(b) ..................................................... 1

APTRA section 16(b) ................................................. 16

Consumer Product Safety Act, § 10 ......................... 27

Consumer Product Safety Act, § 11 ......................... 27

Consumer Product Safety Act, § 9 (e) ...................... 27

Consumer Product Safety Act, § 9(a)(1, 2) ............... 27

TABLE OF AUTHORITIES – Continued

Page

Tex. Gov’t Code § 22.001(a) ...................................... 34

Tex. Health & Safety Code § 382.002 ...................... 28

Tex. Health & Safety Code § 382.032 ...................... 29

Tex. Health & Safety Code § 382.032(a) ........ 5, 28, 37

JUDICIAL RULES

Travis County Texas L.R. 10 ...................................... 14

Tx. R. Civ. P. 91a .................................................. 3, 14

REGULATIONS

Ala. Admin. Code (SHPDA) Rule 410-1-11-.01 ........ 17

Ala. Admin. Code § 22-21-270(d) .............................. 17

29 C.F.R. § 1613.405(b)............................................... 22

30 Tex. Admin. Code § 101.300(10) ............................ 4

30 Tex. Admin. Code § 101.301 .................................. 3

30 Tex. Admin. Code § 101.302(a)(1) ......................... 5

30 Tex. Admin. Code § 101.302(d)(1)(A) .................... 5

30 Tex. Admin. Code § 101.302(f)(3) .......................... 5

30 Tex. Admin. Code § 101.303(a)(1) ....................... 33

30 Tex. Admin. Code § 101.304(e)(1)(C) ....... 12, 29, 35

30 Tex. Admin. Code § 101.306(a) .............................. 5

30 Tex. Admin. Code § 101.309(b)(2) ........... 12, 29, 35

30 Tex. Admin. Code § 101.309(d) .............................. 5

30 Tex. Admin. Code § 303(a)(1)(A) ........................... 5

30 Tex. Admin. Code §§ 101.300–.304 ................... 4, 5

TABLE OF AUTHORITIES – Continued

Page

30 Tex. Admin. Code §§ 101.300–.311 ................... 3, 5

30 Tex. Admin. Code 101.378 ................................... 30

OTHER AUTHORITIES

U.S. Envtl. Prot. Agency,

Guidance on Airport Emission Reduction

Credits for Early Measures Through

Voluntary Airport Low Emission

Programs (Sept. 2004) ....................................... 31

U.S. Envtl. Prot. Agency,

Improving Air Quality with Economic

Incentive Programs, page 260 (Jan. 2001),

available at https://www.epa.gov/nsr/

improving-air-quality-economic-incentiveprograms ............................................................ 30

OPINIONS BELOW

The Order of the Texas Supreme Court dated

February 18, 2022, denying a Petition for Review is

included in the Appendix at App.1a. The Memorandum

Opinion of the United States Court of Appeals for the

First District of Texas dated December 17, 2020 is

included in the appendix to this petition at App.2a.

The Order of the 345th District Court, Travis County,

Texas granting the Texas Commission on Environmental Quality Plea to Jurisdiction, dated April 26,

2019 is included at App.20a.

JURISDICTION

The Texas Supreme Court entered its judgment

on April 22, 2022. Jurisdiction in this Court is proper

under 28 U.S.C. § 1257(a).1

1 Cox Broad. Corp. v. Cohn, 420 U.S. 469, 485 (1975); Shaffer v.

Heitner, 433 U.S. 186, 195 n.12 (1977).

CONSTITUTIONAL PROVISIONS INVOLVED

U.S. Const. amend. XIV, § 1, cl. 2

The Due Process Clause of the Fourteenth Amendment to the United States Constitution provides in

pertinent part:

No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens of the United States; nor shall any State

deprive any person of life, liberty, or property,

without due process of law. . . .

U.S. Const. amend. V

The Fifth Amendment to the United States

Constitution provides:

No person shall be deprived of life, liberty, or

property, without due process of law; nor shall

private property be taken for public use, without

just compensation.

INTRODUCTION

The dispute in this case arises from the airemission-credits program established by the Texas

Commission on Environmental Quality (the “TCEQ”).2

The Texas program is based on USEPA guidance

pursuant to the 1990 Federal Clean Air Act. The

purpose of the voluntary program “is to allow the owner

or operator of a facility . . . to generate emission credits

by reducing emissions beyond the level required by

any applicable local, state, or federal requirement,”

which the facility owner or operator then may use in

accordance with the program rules.3

Appellant AC Interests, L.P., formerly American

Coatings, L.P. (“AC Interests”), applied to the TCEQ

for emission credits. After the TCEQ denied the application, AC Interests sought judicial review but its appeal

of the decision to the district court was dismissed

under Texas Rule of Civil Procedure 91a for lack of

proper statutory service. The Texas Supreme Court

reversed and remanded in March 2018.4

On remand, in November 2018—after the latest

date (October 2018) the purported TCEQ 60-month

time limit had expired—the TCEQ filed a plea to the

jurisdiction, arguing the case became moot when any

emission credits AC Interests might have generated

2 30 Tex. Admin. Code §§ 101.300–.311.

3 Id. § 101.301.

4 AC Interests, L.P. v. Tex. Comm’n on Envtl. Quality, 543 S.W.3d

703 (Tex. 2018). (App.22a).

at its facility expired and, thus, any judgment rendered

by a court will be without any practical legal effect.

The district court granted the plea to the jurisdiction,

and AC Interests appealed the dismissal order. (App.

20a).

In this petition, AC Interests contends (1) the

mootness doctrine does not apply; (2) the TCEQ’s denial

of emission credits is an unconstitutional taking; and

(3) it is entitled to a hearing on merits or a jury trial.

This Court should therefore grant the petition in

this case.

STATEMENT OF THE CASE

The TCEQ administers the Texas Clean Air Act,

which establishes a regulatory framework to “safeguard

the state’s air resources from pollution.” Using provisions of the Federal Clean Air Act (1970, et. seq.) as

a basis and to incentivize the voluntary reduction of

emissions, the TCEQ has adopted rules authorizing it

to grant emission credits, including emission reduction credits (“ERCs”).5 An ERC is a “certified emission

reduction . . . that is created by eliminating future

emissions and quantified during or before the period

in which emission reductions are made from a facility.”6

One way a company may generate emission credits

is by permanently shutting down a facility that lawfully

5 30 Tex. Admin. Code §§ 101.300–.304.

6 Id. § 101.300(10).

emits certain pollutants.7 The emission reduction must

be certified, meaning the reduction must be “enforceable, permanent, quantifiable, real, and surplus.”8 If

the TCEQ certifies the reduction, the facility owner or

operator may use, trade, sell, or bank the emission

credit for later use.9 AC Interests asked the TCEQ to

certify ERCs generated at an AC Interests facility

that had ceased emissions. The TCEQ denied the

application, prompting AC Interests to timely file a

petition for judicial review in December 2014.10

That petition stated that the AC Interests facility

was destroyed by fire in July 2010. Although it obtained

a permit to reconstruct the facility from the TCEQ in

May 2013, AC Interests decided against rebuilding.

Instead, AC Interests applied for certification of ERCs

in October 2013—and then revised its application three

times between November 2013 and July 2014—based

on a permanent-shutdown emissions reduction strategy.11 In November 2014, the TCEQ denied the certification of ERCs.

AC Interests’ filing stated that the TCEQ’s refusal

to certify ERCs violated “statutory provisions, exceeded

[TCEQ’s] statutory authority, and was arbitrary and

7 Id. §§ 101.302(a)(1), .303(a)(1)(A).

8 Id. § 101.302(d)(1)(A).

9 Id. §§ 101.306(a), .309(d).

10 A person “affected by” a TCEQ decision may appeal by filing

a petition in a Travis County district court. Tex. Health & Safety

Code § 382.032(a).

11 The regulatory framework for emission credit applications

provides that an application may be revised upon written notice

from TCEQ of its denial. Id. § 101.302(f)(3).

capricious.” AC Interests requested in its petition that,

among other things, the district court: (1) set aside the

TCEQ’s decision; (2) remand to the TCEQ for further

administrative proceedings on AC Interests’ application for ERC certification; and (3) order that the “TCEQ

issue an Emission Banking Credit and Allowance

Certificate to AC Interests,” along with costs, attorney’s

fees, and all other relief to which AC Interests was

entitled.

The district court initially dismissed AC Interests’

appeal in March 2015 because AC Interests did not

timely serve the TCEQ with the petition for judicial

review. But in March 2018, the Texas Supreme Court

reversed and remanded, concluding that the late service

did not require dismissal.12 Said fact was conveniently

overlooked by the First Court of Appeals in their December 2020 decision.

On remand, in November 2018, the TCEQ again

sought dismissal through a plea to the jurisdiction.

The TCEQ asserted for the first time that the appeal

was moot because any ERCs that could have been

certified expired 60 months after the date of the emissions reduction at AC Interests’ facility. By either

parties’ calculation, any ERC that AC Interest might

have generated expired 60 months after the facility

shut down, which was either the date of the facility

fire, in July 2010, or the date AC Interests decided not

to reconstruct the facility, in October 2013.13 Since

12 AC Interests, L.P., 543 S.W.3d 714-15. (App.22a).

13 The TCEQ asserted its mootness contention for the first time

in its jurisdictional plea filed with the district court in November

2018. See id.; AC Interests, L.P. v. Tex. Comm’n on Envtl. Quality,

the TCEQ’s Plea to the Jurisdiction was after either

date, said plea was filed late. Said late filing was also

conveniently overlooked by the First Court of Appeals

in their December 2020 decision. (App.2a).

The TCEQ alleges that a live controversy ceased

to exist between the parties on July 31, 2015, during

the prior appeal, or, at the latest, by October 2018, and

thus any decision by the district court would be without

“a practical legal effect on the alleged controversy related

to [the] TCEQ’s denial of AC Interests’ ERC application.” The district court granted the TCEQ’s plea to

the jurisdiction. (App.20a).

An appeal to the Texas First Court of Appeals

followed. In December 2020, the First Court of Appeals

affirmed the district court’s ruling. (App.2a). Following that, an appeal was made to the Texas Supreme

Court, which after receiving brief from AC Interests

and TCEQ affirmed the lower court’s ruling on February 18, 2022. (App.1a). Later the Texas Supreme Court

denied AC Interests’ Motion for Rehearing on April 22,

2022. (App.65a).

On this basis, AC Interests is filing Petition for a

Writ of Certiorari.

521 S.W.3d 58 (Tex. App.—Houston [1st Dist.] 2016), rev’d by

543 S.W.3d at 707–15.

REASONS FOR GRANTING THE PETITION

THE COMMON LAW TOLLING DOCTRINE APPLIES

WHEN THERE IS A LEGAL IMPEDIMENT TO

EXERCISING A LEGAL RIGHT WITHIN THE

LIMITATIONS PERIOD AND AC INTERESTS’ DUE

PROCESS RIGHTS UNDER THE FIFTH AND

FOURTEEN AMENDMENT WERE VIOLATED.

A. The Common Law Tolling Doctrine

Applies When There Is a Legal Impediment to Exercising a Legal Right Within

the Limitations Period.

The common law tolling doctrine provides that,

when “a person is prevented from exercising his legal

remedy by the pendency of legal proceedings, the time

during which he is thus prevented should not be counted

against him in determining whether limitations have

barred his right.”14

AC Interests contends that filing suit to establish

the right to ERCs falls squarely within the equitable

tolling doctrine described above. When a party must

resort to legal proceedings to establish the right to

ERCs, that party is prevented from using the ERCs

14 Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 157 (Tex. 1991),

quoting Walker v. Hanes, 570 S.W.2d 534, 540 (Tex. Civ. App.Corpus Christi 1978, writ ref’d n.r.e.). CTS Corporation v. Peter

Waldburger et al., 134 S.Ct. 2175, (2014) (Statutes of limitations,

but not statutes of repose, are subject to “equitable tolling,” a

doctrine that pauses the running of, or tolls, a statute of limitations when a litigant has pursued his rights diligently but some

extraordinary circumstance prevents him from bringing a timely

action.)

during the pendency of the case—it is that very case

that answers the question of whether the party has a

right to the credits in the first place. The time during

which the legal proceedings are pending should therefore not be counted against a person when determining

whether the 60-month period for using ERCs has

expired.

The Court of Appeals, however, held that tolling

did not apply. It reasoned that equitable tolling only

applies when the outcome of one case determines the

viability of a second cause of action.15 Because this

lawsuit does not seek to define the rights at stake in

another lawsuit—but the right to use ERCs—the Court

held that the doctrine does not apply.16

The equitable tolling doctrine is not so limited.

Courts have long applied equitable tolling to other kinds

of limitations periods such as, for example, deadlines

for non-judicial foreclosures. Those cases do not have

to do with exercising the right to sue but exercising a

contractual right that is subject to a legally imposed

limitations period.17 Thus, equitable tolling extends

beyond the existence of the ability to file suit and covers

15 AC Interests, 2020 Tex. App. LEXIS 9988 at *11 n.18.

16 Id.

17 Pioneer Bldg. & Loan Ass’n v. Johnston, 117 S.W.2d 556, 559

(Tex. Civ. App.—Waco 1938) (applying equitable tolling where

injunction prevented non-judicial foreclosure); Cloward v. United

States Bank Tr., N.A., No. 05-18-01397-CV, 2020 Tex. App. LEXIS

6107, at *15 (Tex. App.—Dallas Aug. 3, 2020, pet. filed) (applying

equitable tolling where individuals were “legally impeded from

exercising their contractual right to sell the property at a nonjudicial foreclosure sale”).

the exercise of other legal rights on which a limitations

period is attached.

The Court of Appeals’ error stemmed from focusing

on the equitable tolling doctrine as applied to legal

malpractices cases, as set out in Hughes v. Mahaney

& Higgins.18 The Hughes rule does entail two lawsuits

—one in which a party must defend an attorney’s actions

and one in which the party is suing the attorney for

those same actions.19 However, the tolling doctrine from

which Hughes derived its malpractice-based rule is

much broader.20 The broader doctrine does not require

the existence of two lawsuits, but instead asks a much

simpler question: does a legal proceeding function as

an impediment to the exercise of a legal right?21

The scenario in this case lies at the intersection

of two seminal tolling cases. In the first, Cavitt v. Amsler,

the appellate court tolled the statute of limitations for

recovering stock dividends during the period a suit to

establish the right to those dividends was pending.22

Central to its reasoning was the fact that Cavitt could

18 AC Interests, 821 S.W.2d 154 (Tex. 1991); 2020 Tex. App. LEXIS

9988 at *12 n.18.

19 Hughes v. Mahaney & Higgins, 821 S.W.2d at 157 (Tex. 1991).

20 Id. (collecting equitable tolling cases and concluding that the

“rationale applied in these cases” should also apply to legal malpractice scenario).

21 Cloward, 2020 Tex. App. LEXIS 6107, at *15 (Tex. App.—Dallas

Aug. 3, 2020, pet. filed) (applying tolling because there was a

legal impediment to exercising contractual right).

22 Cavitt v. Amsler, 242 S.W. 246, 248-49 (Tex. Civ. App. 1922)

cited by Hughes, 821 S.W.2d at 157, (Tex. 1991).

not bring a suit to enforce a right which had not yet

been established.23

In the second, Pioneer, the Court tolled the statute

of limitations on exercising the contractual right to

initiate a non-judicial foreclosure because an injunction

prevented Pioneer from doing so.24

Here, as in Cavitt, an individual cannot exercise

its right to emission reduction credits until the right

to those credits has been established. The Court of

Appeals decision puts individuals in an impossible

position, requiring them to exercise a right that does

not yet exist. In Cavitt, the court refused to require a

person to exercise a right that did not yet exist.25 The

Court should do the same here.

And, as in Pioneer, the right at stake here is not

the right to sue, but the right to take non-judicial

action—action on which the law places a limitations

period. The Court of Appeals erred in holding that the

limitations period that is the subject of equitable tolling

must pertain to bringing a lawsuit.

The TCEQ devotes much of its response to

arguing that equitable tolling should not apply because

tolling is not written into the text of the Administrative

Code.26 However, equitable tolling is a common law

doctrine. By its very nature it is not written into statutes,

23 Id.

24 Pioneer, 117 S.W.2d at 559

25 Cavitt v. Amsler, 242 S.W. 246, 248-49 (Tex. Civ. App. 1922).

26 Petition Response at 7, 8-9, 13.

but instead applies when certain equitable circumstances are present.27 Therefore, it is not significant

that the statute creating the limitations period at issue

here does not include a tolling provision.28

Instead, the question should be whether the common law doctrine of equitable tolling applies in these

circumstances. That doctrine says that, when “a person

is prevented from exercising his legal remedy by the

pendency of legal proceedings, the time during which

he is thus prevented should not be counted against

him in determining whether limitations have barred

his right.” As set out in AC Interest’s Petition for Review,

that doctrine squarely applies here: the 60-month limitations period for using Emission Reduction Credits

(ERCs) should be tolled while litigation to establish

the right to those credits is pending.

27 Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 156-57 (Tex.

1991).

28 As noted in AC Interest’s Petition for Review, the Administrative Code has two possible limitations periods, but does not have

built-in exceptions to those periods. 30 Texas Admin. Code

§ 101.309(b)(2) (60 months); 30 Texas Admin. Code § 101.304(e)

(1)(C) (72 months). Therefore, it does not express a policy determination intending to exclude the application of common law

doctrines. Cf. Underkofler v. Vanasek, 53 S.W.3d 343, 346 (Tex.

2001) (“We defer to the Legislature’s explicit policy determination that only two exceptions apply to the statute of limitations

for these statutory claims . . . ”).

B. AC Interests’ Due Process Rights Under

the Fifth and Fourteen Amendment Were

Violated.

To prevail on its due process claim, AC Interests

must show both that it had a recognized liberty or property interest and was deprived of that interest without

adequate notice or a meaningful opportunity to be

heard.29

The applicable texts of the Fifth and Fourteenth

Amendments are as follows:

AMENDMENT V. No person shall be deprived

of life, liberty, or property, without due process

of law; nor shall private property be taken for

public use, without just compensation.

AMENDMENT XIV. Citizenship; Privileges and

Immunities; Due Process; Equal Protection;

Appointment of Representation; Disqualification of Officers; Public Debt; Enforcement

SECTION 1. All persons born or naturalized

in the United States, and subject to the

jurisdiction thereof, are citizens of the United

States and of the State wherein they reside.

No State shall make or enforce any law

which shall abridge the privileges or immunities of citizens of the United States; nor

shall any State deprive any person of life,

liberty, or property, without due process of

law; nor deny to any person within its

29 Mathews v. Eldridge, 424 U.S. 319, 332–35, 96 S.Ct. 893, 47

L.Ed.2d 18 (1976).

jurisdiction the equal protection of the

laws.

1. AC Interests’ Property Interest

AC Interests has demonstrated 7.3 tons per year

of Volatile Organic Compound (“VOC”) Emission Credit

reductions. In 2014, VOC Emission Credits were valued

at approximately $300,000 per ton in the Houston

Galveston Ozone Non-Attainment Area Emission Credit

Market (“HGA NAA”); this yields a total value of about

$2,190,000. Adding approximately 24% interest total

over eight years brings the total value to $2,715,600.

That is, the TCEQ has cost AC Interests a net of

$2,715,600 in property interests. AC Interests believes

this is a “Taking” under the Takings Clause of the

Fifth Amendment.

2. AC Interests Has Been Deprived of

Due Process of Law and the Equal

Protection of the Laws.

AC Interests’ original pleading on December 10,

2014 contained a demand for a “Hearing on the Merits”

of AC Interests’ Emission Credit application pursuant

to Travis County Texas District Court’s Local Rule 10

—Administrative Hearings. This was delay by TCEQ’s

Rule 91a filing until the Texas Supreme Court reversed

and remanded the TCEQ 91a filing in March 2018.

This consumed 39 months. Next the TCEQ filed a late

“Plea to the Jurisdiction” in November 2018. This filing

has consumed an additional (from March 2018) 52

months. The total—91 months-dwarfs the purported

TCEQ Emission Credit time limit of 60 months.

Said filings by the TCEQ have deprived AC Interests of Due Process of Law and the Equal Protection

of the Laws, by purposefully delaying the resolution of

the case and any hearing on the merits of the case

beyond the “TCEQ 60 month Emission Credit” time

limit. AC Interests was deprived of above property

interest without adequate notice or a meaningful

opportunity to be heard. 30

C. Several State Supreme Courts Have Issued

Rulings on Either the Due Process Clause

or Equitable Tolling.

Texas and Alabama have allowed equitable tolling;

whereas Virginia has not allowed it. California and

Alabama have issued rulings that Due Process has

been denied; whereas Virginia has issued rulings that

Due Process has not been denied.

VIRGINIA. In City of Richmond, Et Al. v. Mary J.

Dervishian, Et Als., 190 Va. 398, Supreme Court of

Appeals of Virginia (Va. 1950).31 Mary J. Dervishian

filed a bill in equity against the City of Richmond for

an injunction to restrain defendants from instituting

any condemnation proceedings under city charter for

condemnation of realty for a parking area, and other

landowners were permitted to intervene as complainants. The Supreme Court of Appeals held that proposed

condemnation was for an authorized public use, that

city ordinance authorizing condemnation was not a

denial of due process, that it was not necessary for city

30 Mathews v. Eldridge, 424 U.S. 319, 332-35, 96 S.Ct. 893, 47

L.Ed.2d 18 (1976).

31 City of Richmond, Et Als. v. Mary J. Dervishian, Et Als., 190

Va. 398, Supreme Court of Appeals of Virginia (Va. 1950)

to make an attempt first to purchase the realty before

instituting condemnation proceedings, that city charter,

and not general statute was controlling with respect to

condemnation proceedings, and that ordinance authorizing condemnation was defective as to description of

realty sought to be condemned.32

TEXAS. In Commercial Life Insurance Company

v. Texas State Board of Insurance, 774 S.W.2d 650,

652, (Tex. 1989),33 the Supreme Court of Texas determined that the fifteen-day period for filing a motion for

rehearing does not begin to run until a party receives

notice of the complained of agency order. To reach

this conclusion, the court found that section 16(b) of the

Administrative Procedure and Texas Register Act

(APTRA)34 imposed a statutory duty on the agency to

notify “parties” of its orders and decisions: “[W]e

interpret the notice provision of section 16(b) to

ensure that a party’s ability to seek judicial review of

agency orders and decisions will not be compromised

solely because of the agency’s failure to give notice of

the order.”35

ALABAMA. In Ex parte STV One Nineteen Senior

Living, LLC, d/b/a Somerby at St. Vincent’s One Nineteen v. STV One Nineteen Senior Living, LLC, d/b/a

Somerby at St. Vincent’s One Nineteen; State Health

32 Id.

33 Commercial Life Insurance Company v. Texas State Board of

Insurance, 774 S.W.2d 650, 652, (Tex. 1989).

34 Section 16(b) of the Texas Administrative Procedure and Texas

35 Id.; see also Meador-Brady Management Corp. v. Texas Motor

Vehicle Comm’n, 866 S.W.2d 593, 595-96 (Tex. 1993).

Planning and Development Agency; and Certificate of

Need Review Board, 161 So.3d 196, Supreme Court

of Alabama (Ala. 2014),36 first assisted-living facility

sought review of decision by the Certificate of Need

Review Board (CONRB) granting second facility’s

request for an emergency certificate of need (CON) for

24 specialty-care assisted-living-facility beds. The

Circuit Court, Montgomery County, No. CV-10-901242,

Eugene W. Reese, J., affirmed. First facility appealed.

The Court of Civil Appeals, 161 So.3d 187, reversed

and remanded with instructions. Second facility sought

certiorari review, which was granted. The Supreme

Court of Alabama held that: [1] first facility did not

waive on appeal right to challenge issuance of emergency CON; [2] second facility’s CON had not vested

before it was challenged; and [3] application did not

demonstrate an emergency under statute that allowed

emergency applications.37

Note: Endnote 11-See Ala. Admin. Code (SHPDA)

Rule 410-1-11-.01, explaining that a CON is “valid for

a period” that runs “from the date of issuance,” and

also that that period is tolled during the pendency of any

judicial review of the decision to issue the CON.38

Note: Endnote 12-In addition to, and corroborative

of, the foregoing, an interpretation of § 22-21-270(d) of

the nature urged by Somerby would raise due-process

36 Ex parte STV One Nineteen Senior Living, LLC, d/b/a Somerby

at St. Vincent’s One Nineteen v. STV One Nineteen Senior Living,

LLC, d/b/a Somerby at St. Vincent’s One Nineteen; State Health

Planning and Development Agency; and Certificate of Need Review

Board, 161 So.3d 196, Supreme Court of Alabama (Ala. 2014).

37 Id.

38 Id. At 211.

concerns. Somerby insists that, despite Danberry’s

timely filings, somehow the law prevented Danberry

from challenging Somerby’s CON. Such a possibility,

especially the foreclosure of any judicial review, raises

a fundamental due process problem. Danberry should

not be put in the position of having followed the review

processes prescribed to it by law and yet for reasons

beyond its control be foreclosed from receiving that

review.39

CALIFORNIA. In Voices of the Wetlands v. State

Water Resources Control Board, et al, 52 Cal.4th 499

(Cal. 2011),40 the Supreme Court held that:[1] superior

court had subject matter jurisdiction over the mandamus petition; [2] retaining jurisdiction pending interlocutory remand for new evidence was proper and [3]

premising best technology available (BTA) finding on

comparison of costs and benefits was proper. Id. The

holding went on to state: “We agree with plaintiff, and

with the courts in Sierra Club v. Contra Costa County

and Resource Defense Fund, that any agency reconsideration must fully comport with due process and may

not simply allow the agency to rubber-stamp its prior

unsupported decision.”41

39 Alabama Republican Party v. McGinley, 893 So.2d 337, 344

(Ala. 2004) (observing that “[t]he hallmarks of procedural due

process are notice and ‘the opportunity to be heard “at a meaningful

time and in a meaningful manner”). Id. At 212.

40 Voices of the Wetlands v. State Water Resources Control Board,

et al, 52 Cal.4th 499 (Cal. 2011).

41 Id. At 528.

D. Each Federal Circuit Court Has Issued

Rulings on Either the Due Process Clause

or Equitable Tolling.

The Second, Fourth, Seventh and Ninth Circuits

have allowed equitable tolling; whereas the First, Fifth,

Sixth, Eleventh, D.C. and Federal Circuits have has

not allowed it. The Tenth Circuit has both allowed and

disallowed equitable tolling. The Third Circuit have

issued rulings that Due Process has been denied;

whereas the First Circuit has issued rulings that Due

Process has not been denied.

FIRST CIRCUIT. In Jordan Hospital, Inc. v. Donna

E. Shalala, etc., et al., 276 F.3d 72 (1st Cir. 2002),42

the First Circuit held that: (1) “no review” provision of

Medicare Act precluded judicial review of decision of

Health Care Financing Administration (HCFA); (2)

any property interest in receiving reimbursement was

sufficiently protected by regulatory scheme; and (3) statutory deadline for filing reclassification applications

was not subject to equitable tolling.43

The holding went on to state: “To prevail on its

procedural due process claim, Jordan must show both

that it had a recognized liberty or property interest

and was deprived of that interest without adequate

notice or a meaningful opportunity to be heard.44

Assuming, without deciding, that Jordan has a legitimate property interest in receiving reimbursement

42 Jordan Hospital, Inc. v. Donna E. Shalala, etc., et al., 276 F.3d

72 (1st Cir. 2002).

43 Id.

44 Mathews v. Eldridge, 424 U.S. 319, 332-35, 96 S.Ct. 893, 47

L.Ed.2d 18 (1976).

payments, we must then determine whether Jordan

raises a colorable constitutional claim. We find that it

has not.”45

SECOND CIRCUIT. City of New York, New York

City Health and Hospitals Corp., State of New York,

Cesar Perales, Commissioner, N.Y.S. Dept. of Social

Services, William F. Morris, Acting Commissioner,

N.Y.S. Office of Mental Health, Jane Does I and II,

Richard Does I, II, III & IV, v. Margaret M. Heckler,

Secretary of Health and Human Services, John A. Svahn,

Commissioner of U.S. Social Security Administration,

742 F.2d 729 (2d Cir. 1984).46 On challenge to procedure utilized by the Social Security Administration in

determination of original and continuing eligibility of

claimants for disability benefits, the United States

District Court for the Eastern District of New York,

Chief Judge invalidated the procedure used. On appeal

by the Secretary of Health and Human Services, the

Court of Appeals held that: (1) submission of questionnaire by plaintiff class members before administration

decision satisfied presentment requirement for jurisdiction of the District Court; (2) the 60–day limitation

period for judicial review is not jurisdictional and was

effectively tolled during time that challenged administrative policy remained operative but undisclosed, and

was tolled until such time as plaintiffs had reasonable

45 Id. At 78.

46 City of New York, New York City Health and Hospitals Corp.,

State of New York, Cesar Perales, Commissioner, N.Y.S. Dept. of

Social Services, William F. Morris, Acting Commissioner, N.Y.S.

Office of Mental Health, Jane Does I and II, Richard Does I, II,

III & IV, v. Margaret M. Heckler, Secretary of Health and Human

Services, John A. Svahn, Commissioner of U.S. Social Security

Administration, 742 F.2d 729 (2d Cir. 1984).

opportunity to learn facts concerning cause of action;

(3) case was one in which writ of mandamus properly

would issue; and (4) where it was determined in federal court that plaintiff class members previously

determined to be disabled for purposes of Social

Security Act disability benefits had been terminated

without proper procedures, reinstatement was properly

ordered.47 Endnote 3: Federal question jurisdiction,48

was also invoked for causes of action based on the rulemaking provision of . . . and the Due Process Clause of

the Constitution. In view of our disposition of the

appeal, we do not reach the question of whether jurisdiction is available on these alternative bases.49

THIRD CIRCUIT. In Irvin Bailey, on Behalf of

Himself and All Others Similarly Situated v. Louis W.

Sullivan, M.D., Secretary of Health and Human

Services of the United States of America, 885 F.2d 52

(3d Cir. 1981),50 the Third Circuit held that Secretary’s

“combination policy,” limiting consideration of combined

effects of unrelated impairments in determining eligibility for disability benefits, violated the Social

Security Act and was invalid.51

47 Id.

48 28 U.S.C. § 1331 (1982).

49 Id. At 738.

50 Irvin Bailey, on Behalf of Himself and All Others Similarly

Situated v. Louis W. Sullivan, M.D., Secretary of Health and

Human Services of the United States of America, 885 F.2d 52 (3d

Cir. 1981).

51 Id.

FOURTH CIRCUIT. In Cochran v. Holder, 564 F.

3d 318 (4th Cir. 2009),52 Fourth Circuit construed 29

C.F.R. § 1613.405(b) as providing for the tolling of the

90-day statute of limitations when an employee files a

timely motion for reconsideration. 53

FIFTH CIRCUIT. In The Matter of Contractor

Technology, Ltd., St. Paul Travelers Insurance Company

v. Century Asphalt Materials, LLC., 529 F.3d 313 (5th

Cir. 2008),54 the Fifth Circuit held that: [1] materials

supplier had not “substantially complied” with requirement it provide timely written notice under McGregor

Act by sending notice of claim within three days after

date of repayment established by bankruptcy court,

approximately seventeen months after its delivery of

material, and [2] McGregor Act’s notice requirement

was not a statute of limitations, and equitable tolling

did not apply to bond claim.55

SIXTH CIRCUIT. In Jerry Engleson, v. Unum Life

Insurance Company of America; Seibert Keck Long

Term Disability Income Plan, 723 F.3d 611 (6th Cir.

2013), the Sixth Circuit held that: [1] district court’s

decision in upholding administrator’s denial of benefits

to participant on limitations grounds was functional

equivalent of summary judgment ruling; [2] administrator was not under regulatory obligation in 2001 to

disclose in its claim denial letter either participant’s

52 Cochran v. Holder, 564 F. 3d 318 (4th Cir. 2009).

53 Id.

54 The Matter of Contractor Technology, Ltd., St. Paul Travelers

Insurance Company v. Century Asphalt Materials, LLC., 529

F.3d 313 (5th Cir. 2008).

55 Id.

right to pursue litigation in federal court or limited

window for obtaining such review; [3] phrase, “appropriate information,” requires only the disclosure of

information pertaining to internal processes, not judicial review; [4] neither subsequent grant-of-benefits

letter nor even later letter refusing another internal

appeal constituted adverse benefit determination as

to prior claim; [5] administrator’s summary plan

description (SPD) complied with regulation; [6]

administrator did not affirmatively waive contractual

limitations provision; and [7] participant was not

diligent in pursuing his benefits, and thus he was not

entitled to equitable tolling of contractual limitations

period.56

SEVENTH CIRCUIT. In Donald Fessenden v.

Reliance Standard Life Ins. Co. and Oracle USA, Inc.,

Group Long Term Disability Plan, 927 F.3d 998 (7th

Cir. 2019),57 the Seventh Circuit held that administrator

forfeited deferential standard of review by failing to

comply with deadline for issuing final decision.58

When a claimant seeks review of an administrator’s denial of benefits, the administrator must

review the claim “not later than” a specified period of

time—45 days for disability claims and 60 days for

others.59 The administrator can extend that time, but

only when “special circumstances” apply. During the

56 Id.

57 Donald Fessenden v. Reliance Standard Life Ins. Co. and Oracle

USA, Inc., Group Long Term Disability Plan, 927 F.3d 998 (7th

Cir. 2019)

58 Id.

59 Id.

extension period, a tolling mechanism protects the

administrator from delay on the part of the claimant.60

EIGHTH CIRCUIT. In Charles and Marion Hefti v.

Commissioner of Internal Revenue., 899 F.2d 709 (8th

Cir. 1990), 61 the Eighth Circuit held that: (1) denial of

taxpayers’ motion for summary judgment merged into

order of dismissal, so as to permit Court of Appeals to

review limitations issue, and (2) action had to be

remanded for determination as to whether tax regulation regarding tolling of limitations period exceeded

statutory authorization.62

NINTH CIRCUIT. In Public Citizen Inc.; Center for

Auto Safety; The Trauma Foundation; Andrew

McGuire; Jane Kelly; Ralf Hotchkiss, Petitioners,

Automotive Occupant Restraints Council, Intervenors

v. Norman Y. Mineta, Alliance of Automobile Manufacturers, Inc., 343 F.3d 1159 (9th Cir. 2011), 63 the

court held that: (1) NHTSA’s interpretation as to

when final rule was “issued” for purposes of statutory

59-day period for filing petition for judicial review was

unreasonable and not entitled to deference; (2) for

purposes of 59-day period for filing petition for judicial

60 Id.

61 Charles and Marion Hefti v. Commissioner of Internal Revenue.,

899 F.2d 709 (8th Cir. 1990).

62 Id.

63 Public Citizen Inc.; Center for Auto Safety; The Trauma Foundation; Andrew McGuire; Jane Kelly; Ralf Hotchkiss, Petitioners,

Automotive Occupant Restraints Council, Intervenors v. Norman

Y. Mineta, Alliance of Automobile Manufacturers, Inc., 343 F.3d

1159 (9th Cir. 2011).

review, NHTSA regulation is “issued” on the date that

regulation is made available for public inspection; (3)

order was “issued” as of published filing date in Federal Register; (4) NHTSA regulation limiting tolling of

statutory period for seeking judicial review did not

limit judicial review to parties who filed formal petition

for reconsideration; (5) petitioners who did not file

petition for reconsideration were precluded from seeking

review of provision that was the same in both interim

and final rule; and (6) transfer of timely filed petition for

review was warranted.64

TENTH CIRCUIT. In Mono-Therm Industries, Incorporated and Con-Serv, a Division of Bay State Gas

Company v. Federal Trade Commission, 653 F.2d 1373

(10th Cir. 1981),65 the Tenth Circuit held that: (1) corporation’s request for emergency relief from Commission’s enforcement of rule during pendency of appeal

was moot in light of commission’s tentative decision to

grant certain cellulose producers, including corporation, partial exemption from requirements of essential

portion of rule, and (2) 60-day appeal period was not

tolled or reset by any action of Commission from date of

rules promulgation to date of alleged final promulgation which would save corporation’s otherwise untimely petition.66

Later In Jeremy E. Riley v. Immigration & Naturalization Service, The District Director, District 19, 310

64 Id.

65 Mono-Therm Industries, Incorporated and Con-Serv, a Division

of Bay State Gas Company v. Federal Trade Commission, 653

F.2d 1373 (10th Cir. 1981).

66 Id.

F.3d 1253 (10th Cir. 2002), 67 the Tenth Circuit held

that: (1) district court had habeas jurisdiction to consider a challenge by non-criminal alien to legality of his

extended detention; (2) alien’s supervised release from

detention to which he was subject following entry of a

final order of deportation mooted his habeas challenge

to legality of that detention; and (3) regulatory

timeline for filing motion to re-open deportation proceedings was subject to equitable tolling. However, the

court held that the INS’s refusal to join a motion to reopen did not violate due process because there is no

right or entitlement to such relief.68

ELEVENTH CIRCUIT. In Harriet Wilson v. The Standard Insurance Company, 613 Fed. Appx. 841 (11th

Cir. 2015),69 the Eleventh Circuit held that: [1] contractual limitations period was enforceable against

claimant’s untimely claim, and [2] claimant was not

entitled to equitable tolling of her untimely claim due

to lack of diligence.70

D.C. CIRCUIT. In Laminators Safety Glass Association v. Consumer Product Safety Commission, 578

F.2d 406 (DC Cir. 1978), 71 the D.C. Circuit held that

held that association failed to file petition for review

within 60-day period after promulgation of consumer

67 Jeremy E. Riley v. Immigration & Naturalization Service, The

District Director, District 19, 310 F.3d 1253 (10th Cir. 2002).

68 Id.

69 Harriet Wilson v. The Standard Insurance Company, 613 Fed.

Appx. 841 (11th Cir. 2015).

70 Id.

71 Laminators Safety Glass Association v. Consumer Product

Safety Commission, 578 F.2d 406 (DC Cir. 1978).

product safety standard as required. Id. Since Consumer

Product Safety Act and regulations promulgated thereunder did not provide for rehearing or reconsideration

after promulgation of consumer product safety standard, statutory period for seeking judicial review of

consumer standard covering various architectural

glazing materials, including laminated glass, was not

tolled by association’s filing of petition for reconsideration.72, 73 Endnote 8: The Association presents an

alternative argument that if the consumer product

safety standard was promulgated in January 1977,

LSGA has a due process right to file post-promulgation exceptions since the Association came into existence only after the standard became final. Individual

members of the association, however, had notice of the

proceedings and a full opportunity to participate. Under

these circumstances, we find the petitioner’s due process

claims without merit.74

FEDERAL CIRCUIT. In Winthrop J. Block, Patrick

M. Burns, Brenda Iwasyk, David M. Jacobs and

Verborie W. Shaw, v. Secretary of Veterans Affairs, 641

F.3d 1313 (Fed. Cir. 2011),75 the Federal Circuit held

that: [1] filing of district court action could not serve

to toll running of statute of limitations with regard to

instant cause of action and [2] Veterans’ Judicial Review

Act (VJRA) did not retroactively create cause of action

72 Consumer Product Safety Act, §§ 9(a)(1, 2), (e), 10, 11, 15 U.S.C.A.

§§ 2058(a)(1, 2), (e), 2059, 2060.

73 Id.

74 Id. At 468.

75 Winthrop J. Block, Patrick M. Burns, Brenda Iwasyk, David

M. Jacobs and Verborie W. Shaw, v. Secretary of Veterans Affairs,

641 F.3d 1313 (Fed. Cir. 2011).

for procedural challenge to Veterans’ Administration

regulations.76 Petitioners did not press the due process

claim that was alleged in the original district court

complaint.77

II. WITHOUT TOLLING THE PURPOSE OF THE CLEAN

AIR ACTS WOULD BE FRUSTRATED.

The Texas Clean Air Acts created a mechanism

by which individuals can challenge erroneous decisions

by the TCEQ. It did this by creating the right to

appeal TCEQ decisions to the district court of Travis

County.78

Under the Court of Appeals’ decision, that right

to appeal is undermined. If litigation takes too long—

a factor over which individuals often have little control

—the right to appeal is lost because the issue becomes

moot. In the case at bar, for example, AC Interests has

spent years defending against the TCEQ’s efforts to

dismiss its case on procedural grounds. Through no

fault of its own, it has lost its ability to meaningfully

appeal the TCEQ’s decision, despite the Clean Air

Act’s provision to the contrary.

In its opinion, the Court of Appeals noted that the

Clean Air Act states that it should be “vigorously

enforced.”79 However, that provision of the Act if

anything, militates in favor of tolling. In order to

“vigorously enforce” the right to appeal TCEQ decisions,

76 Id.

77 Id. At 1317.

78 Tex. Health & Safety Code § 382.032(a).

79 AC Interests, 2020 Tex. App. LEXIS 9988 at *13 quoting Tex.

Health & Safety Code § 382.002.

applying the tolling doctrine is necessary. Otherwise,

individuals will lose the right to appeal through no

fault of their own, whenever litigation is protracted.

This is not a case where a statute has built-in

exceptions to a limitations period, which indicate the

Legislature’s intent to exclude common law tolling.80

Here, the Administrative Code sets out either a 60 or a

72-month period in which to use emission credits.81 It

does not purport to express a policy determination on

the application of common law doctrines.

The last time AC Interests was before the Texas

Supreme Court, the Court stated of TCAA Section

382.032,82 “The statute’s purpose here is to provide a

process for the judicial review of TCEQ decisions.”

The Court should grant this petition for review in order

to determine whether meaningful judicial review can

indeed take place without tolling of the 60-month period.

AC Interests contends that it cannot.

III. THE CASE IS NOT MOOT.

A. Emission Credit Life

AC Interests’ Briefs to the Texas Supreme Court

include argument as to the usefulness of ERCs beyond

their 60-month lifespan that might preserve the

80 Underkofler v. Vanasek, 53 S.W.3d 343, 346 (Tex. 2001) (“We

defer to the Legislature’s explicit policy determination that only

two exceptions apply to the statute of limitations for these statutory claims . . . ”).

81 30 Texas Admin. Code § 101.309(b)(2) (60 months); 30 Tex.

Admin. Code § 101.304(e)(1)(C) (72 months).

82 Tex. Health & Safety Code § 382.032.

controversy over TCEQ’s denial of ERCs.83 There is no

rationale for Texas’ five year Emission Credit lifetime.

Emission Credits are simply numerical representations

of emission reductions above those reductions required

to attain the NAAQS. Emission Credits do not “spoil;”

therefore, there is no need to limit Emission Credit

lifetimes.

To illustrate-nationwide, excluding Texas, 33 of

38 (86.5%) of Federally approved state and local jurisdictions have an unlimited emission credit lifetime84

Four states (10.8% of jurisdictions)—Louisiana, Maryland, New Jersey, and Pennsylvania—have ten year

Emission Credit lifetimes. Indiana has an emission

credit lifetime of five years, plus time for construction.

Texas has the shortest Emission Credit lifetime—five

years—of any jurisdiction. See Appendix E.

Federal emission reduction credit guidelines support unlimited lifetime for emission reductions whenever practical. TCEQ’s own rule for Discrete Emission

Reduction Credits (“DERCs”) allow an unlimited

Emission Credit lifetime.85

Pursuant to U.S.E.P.A. guidance,86 the federal guidance on economic incentive programs provides:

83 Kallinen, 516 S.W.3d 617, 622 (case is not moot if some issue

remains in controversy). (Tex. 2017).

84 AC Interests v. TCEQ, Texas Supreme Court Case Number

21-0078, Petitioner’s Reply to Respondent’s Brief (1/18/2022), 36.

85 30 TAC 101.378.

86 U.S. Envtl. Prot. Agency, Improving Air Quality with Economic

Incentive Programs, page 260 (Jan. 2001), available at https://

www.epa.gov/nsr/improving-air-quality-economic-incentiveprograms.

The EPA supports unlimited lifetime for emission

reductions whenever practical because they:

●

provide more certainty and flexibility to

sources participating in trading.

●

avoid the emission spikes that could potentially occur at the time that the valid life of

the emission reductions would expire.

●

do not, in general, pose a threat to the overall

goals of EIPs.

Furthermore, Federal Aviation Administration

(“FAA”) guidance on airport emission reduction credits

for early measures through voluntary airport low

emission programs allows up to a 40 year lifetime on

Emission Credits.87

B. Exceptions to Mootness Doctrine

Texas courts recognize two exceptions to the mootness doctrine: (1) the capability of repetition yet evading

review exception; and (2) the collateral consequences

exception.88 “The ‘capable of repetition yet evading

review’ exception is applied where the challenged act

is of such short duration that the appellant cannot

obtain review before the issue becomes moot.” The

‘collateral consequences’ exception has been applied

when Texas courts have recognized that prejudicial

events have occurred “whose effects continued to stigmatize helpless or hated individuals long after the unconstitutional judgment had ceased to operate. Such

87 Guidance on Airport Emission Reduction Credits for Early

Measures Through Voluntary Airport Low Emission Programs,

Prepared by the OAQPS.

88 State v. Lodge, 608 S.W.2d 910, 912 (Tex. 1980).

effects were not absolved by mere dismissal of the

cause as moot.”89

AC Interests contends that both exceptions apply

in this case. It argues that the “capable of repetition

yet evading review” exception applies because the 60

month Emission Credit life was too short in its duration

to be fully litigated. Also, the AC Interests argues that

there is reason to expect that it will be subjected to the

same action in the future because TCEQ did not concede

that the statutes in question were unconstitutional.

The “capable of repetition yet evading review”

exception has been used to challenge unconstitutional

acts performed by the government. AC Interests’

contention is that the 60-month Credit life was of such

short duration that it evaded review because of judicial challenges. AC Interests asserts that the “collateral

consequences” exception is applicable because of both

the public interest in resolving this important question

of administrative law, and the ruling’s potential effect

upon effect upon the numerous future Emission Credit

applications.90

From a policy perspective, the Court of Appeals’

decision creates perverse incentives. The TCEQ now

has the incentive to drag litigation out as long as

possible in the hopes that it will render an individual’s

claim moot.91 This undermines judicial economy by

89 Id. at 19.

90 AC Interests, L.P. v. Tex. Comm’n on Envtl. Quality, 543 S.W.3d

703, 713 (Tex. 2018).

91 Cf., Pioneer, 117 S.W.2d at 559 (“Such a rule would permit a

party, by his own wrongful conduct, to destroy the lawful contractual rights of his adversary, and is therefore unsound.”).

creating a benefit to protracted litigation that disincentivizes settlement. It also places a large burden on

individuals seeking to earn ERCs, who must now anticipate high legal fees, while knowing that the success

of their claim depends not on its merits, but on how

long the process takes.

In addition, failing to apply tolling defeats the

reasonable expectations of individuals who, in reliance

on the TCEQ’s rules, undergo an emission reduction

event in order to generate ERCs.92 The facts in the case

at bar are illustrative. Thirteen months elapsed between

the time AC Interests submitted its first application to

the TCEQ and the date AC Interests’ final application

was denied. AC Interests promptly appealed to the

Travis County district court. AC Interests was then

forced to defend against the TCEQ’s procedural motions

for most of the next six years,93 culminating in dismissal

due to the passage of time. This is an absurd consequence that places individuals in an untenable position.94

The policy concerns implicated by the Court of

Appeals decision affect not just AC Interests, but all

individuals seeking ERCs under the TCEQ’s rules.

The ability to render the right to ERCs moot by virtue

of the process designed to establish that right creates

92 30 Texas Admin. Code § 101.303(a)(1).

93 AC Interests, L.P. v. Tex. Comm’n on Envtl. Quality, D-1-GN14-05160, TCEQ TRCP 91a Motion, January 27, 2015 through

2018; AC Interests, L.P. v. Tex. Comm’n on Envtl. Quality, No.

01-19-00387-CV, 2020 Tex. App. LEXIS 9988, at *2 (Tex. App.—

Houston [1st Dist.] Dec. 17, 2020) (mem. op.).

94 Hughes, 821 S.W.2d at 156-57 (applying tolling doctrine where

strict application of limitations period created untenable position).

a damaging catch-22 that threatens to undermine the

purpose of both the Federal and Texas Clean Air Acts.

Individuals will be hesitant to undergo expensive

emission reductions when the ability to generate ERCs

in return can be so easily destroyed on a procedural

technicality. The Court should grant this Petition in

order to decide this important question of state law.95

IV. TCEQ HAS ASSERTED THAT AC INTERESTS’

EMISSION CREDIT APPLICATION WAS DEFICIENT,

WHICH CLAIM BY TCEQ IS INCORRECT.

During oral arguments before the Trial Court and

First COA, the TCEQ has asserted that AC Interests’

Emission Credit Application was deficient. This claim by

TCEQ is incorrect. AC Interests, between October 14,

2013 and September 22, 2014, submitted over 500

pages of documentation in support of the said Emission

Credit application. This documentation equals or

exceeds, in both quality and quantity, similar applications submitted by “Fortune 500” companies for

comparable applications. This is notwithstanding that

said, Fortune 500 companies have unlimited resources

as compared to AC Interests.

TCEQ WAIVED PLEA TO JURISDICTION RIGHTS BY

FILING A LATE PLEA TO JURISDICTION.

AC Interests’ emission credits were generated on

July 10, 2010—the day the plant burned down. Therefore, pursuant to 30 Texas Admin. Code § 101.309(b)(2),

TCEQ should have filed its Plea to Jurisdiction by

July 10, 2015, the date the 60-month limit expired.

They did not. They waited until November 1, 2018.

Therefore, the TCEQ waived Plea to Jurisdiction

95 Tex. Gov’t Code § 22.001(a).

Rights by filing a Late Plea to Jurisdiction. Said plea

should have been filed by July 11, 2015 at the latest.

VI. THE FACT THAT TOLLING IS NOT WRITTEN INTO

THE STATUTE IS NOT SIGNIFICANT BECAUSE

EQUITABLE TOLLING IS A COMMON LAW

DOCTRINE.

Equitable tolling is a common law doctrine. By

its very nature it is not written into statutes, but

instead applies when certain equitable circumstances

are present.96 Therefore, it is not significant that the

statute creating the limitations period at issue here

does not include a tolling provision.97

Instead, the question should be whether the

common law doctrine of equitable tolling applies in

these circumstances. That doctrine says that, when “‘a

person is prevented from exercising his legal remedy

by the pendency of legal proceedings, the time during

which he is thus prevented should not be counted

against him in determining whether limitations have

96 Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 156-57 (Tex.

1991).

97 And, as noted in AC Interest’s Petition for Review, the Administrative Code has two possible limitations periods, but does not

have built-in exceptions to those periods. 30 Texas Admin. Code

§ 101.309(b)(2) (60 months); 30 Texas Admin. Code § 101.304(e)

(1)(C) (72 months). Therefore, it does not express a policy determination intending to exclude the application of common law

doctrines. Cf. Underkofler v. Vanasek, 53 S.W.3d 343, 346 (Tex. 2001)

(“We defer to the Legislature’s explicit policy determination that

only two exceptions apply to the statute of limitations for these

statutory claims . . . ”).

barred his right.’”98 As set out in AC Interest’s Petition

for Review, that doctrine squarely applies here: the

60-month limitations period for using Emission Reduction Credits (ERCs) should be tolled while litigation to

establish the right to those credits is pending.

VII. A LIMITATIONS PERIOD DOES NOT HAVE TO

PERTAIN TO THE RIGHT TO SUE.

The limitations periods with which the equitable

tolling doctrine is concerned are not confined to the

right to sue. Statutes can restrict the period in which

other legal rights can be exercised as well, and tolling

has been applied in those cases just as forcefully. For

example, as noted in AC Interest’s Petition for Review,

courts have applied tolling to the period in which the

right to initiate a non-judicial foreclosure can be exercised.99

In applying the equitable tolling doctrine, courts

are focused, not on the nature of the limitations period

in question, but rather, on whether a party could not

meet a limitations period because of a legal impediment

to doing so.100 When a person is being asked to exercise

98 Hughes, 821 S.W.2d at 157 quoting Walker v. Hanes, 570 S.W.2d

534, 540 (Tex. Civ. App.-Corpus Christi 1978, writ ref’d n.r.e.).

99 Pioneer Bldg. & Loan Ass’n v. Johnston, 117 S.W.2d 556, 559

(Tex. Civ. App.— Waco 1938) (applying equitable tolling where

injunction prevented non-judicial foreclosure); Cloward v. United

States Bank Tr., N.A., No. 05-18-01397-CV, 2020 Tex. App. LEXIS

6107, at *15 (Tex. App.—Dallas Aug. 3, 2020, pet. denied) (applying

equitable tolling where individuals were “legally impeded from

exercising their contractual right to sell the property at a nonjudicial foreclosure sale”).

100 Cavitt v. Amsler, 242 S.W. 246, 248-49 (Tex. Civ. App. 1922,

op. on reh’g) cited by Hughes, 821 S.W.2d at 157.

a right that does not yet exist, tolling should apply.101

That is exactly what occurred here: AC Interests could

not use ERCs while litigation to establish the right to

those ERCs was pending.

VIII. FAR FROM GIVING ERCS AN “INFINITE LIFE,”

APPLYING TOLLING WOULD LIKELY SHORTEN

THE LENGTH OF LITIGATION AND SUPPORT THE

PURPOSE OF THE CLEAN AIR ACT.

The TCEQ’s litigation tactics are what extended the

life of the litigation in this case. AC Interests spent

over seven years (91 months) defending against the

TCEQ’s procedural motions, all of which distracted

from the real issue of whether AC Interests had a

right to the ERCs in the first place. It is those very

litigation tactics that the TCEQ now has the power to

continue to use to prevent parties from ever using

ERCs by running the clock down on the limitations

period.

The Texas Clean Air Act created the right to appeal

erroneous TCEQ decisions.102 Applying tolling supports

the purpose of the Clean Air Act by allowing for

meaningful judicial review. Without it, individuals

lose their right to appeal whenever litigation is protracted. As is illustrated in this case, that is often a

factor over which individuals have no control. Applying

tolling would shorten the length of litigation by

removing the TCEQ’s incentive to use dilatory litigation

tactics, encouraging speedy resolution of disputes over

the award of ERCs and upholding the purpose of the

Clean Air Act.

101 Id.

102 Tex. Health & Safety Code § 382.032(a).

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

C. WILLIAM SMALLING

COUNSEL OF RECORD

THE LAW OFFICE OF

C. WILLIAM SMALLING, PC

700 MILAM STREET, SUITE 1300

HOUSTON, TX 77002

(713) 353-3920

BSMALLING@BILLSMALLINGLAW.COM

COUNSEL FOR PETITIONER

JULY 15, 2022

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.