Phillips Petroleum Co. v. Texas Commission on Environmental Quality
Phillips Petroleum Company appealed the district court's affirmation of the Texas Commission on Environmental Quality's (TCEQ) decision to grant nitrogen oxide (NOx) emissions allowances to Sweeny Cogeneration Limited Partnership (SCLP). Phillips contended that its ownership of eight boilers entitled it to these allowances, while SCLP argued entitlement based on its operational control of the boilers within a cogeneration facility at Phillips's refinery. The TCEQ had previously issued an air quality permit to SCLP, requiring SCLP to demonstrate operational control over the boilers for site-wide emissions netting. The appellate court affirmed the district court's judgment, ruling that the TCEQ's allocation to SCLP was reasonable. This was because the boilers were considered part of SCLP's "site" under both air quality and Mass Emissions Cap and Trade (MECT) regulations, primarily due to SCLP's established operational control.