TCEQ denies HK Real Estate permit, finds proposed discharge route inadequately characterized

The Texas Commission on Environmental Quality voted unanimously on May 1, 2025 to adopt the administrative law judge’s supplemental proposal for decision and deny the application by HK Real Estate Development LLC for a Texas Pollutant Discharge Elimination System (TPDES) permit (WQ00161501).

The commission concluded the application’s described discharge route was not adequately characterized and that evidence in the record supported the ALJ’s finding that Sandpit (Sandpitt/Sandpia in record spelling variants) Creek terminates in an impoundment rather than having a surface connection to the San Antonio River, undermining the technical review supporting the draft permit.

The decision resolved three remanded issues, with the ALJ, the Executive Director’s Office and the TCEQ Public Interest Counsel (OPIC) all recommending denial. Applicant counsel Helen Gilbert argued the executive director and the ALJs had “got it wrong in this case,” urging the commission to accept modeling the applicant contended showed a hydrologic connection. Protestant counsel Bobby Salahi for Frasier LLC countered, “There is no flow. There is no connection. None,” saying USGS maps and site-visit observations show Sandpit Creek ending in an impoundment and not reaching the San Antonio River. Fernandez Salazar Martinez, representing the executive director, told the commission the ALJ correctly found the draft permit was not protective of surface water and that the route as described in the application does not exist.

Why this mattered: the scope and characterization of a discharge route affect water-quality review, the applicable technical modeling, and whether a discharge is into “water in the state.” The parties debated whether intermittent or ephemeral channels without visually continuous flow are nonetheless state water when they convey effluent; applicant counsel warned that adopting the ED’s interpretation could have “drastic consequences for the state of Texas,” while protestants and the ED said the record did not support issuance of the permit.

Key facts and evidence cited in the record include USGS maps (1973, 2019 and 2022 were cited), a HEC‑RAS model cited by the applicant dated to 2003, photographic and LiDAR imagery reviewed at a June 28, 2024 site visit, and testimony from parties’ site‑visit witnesses. Protestants and ED staff described an impoundment where Sandpit Creek ends—about 350 yards from the San Antonio River—and said there was an uphill barrier between the impoundment and the river. Protestants also raised that the applicant did not perform soil studies required to characterize hydrologic and soil factors under 30 Texas Administrative Code §309.12, and that the applicant had proposed a different discharge route during the remand hearing without new agency analysis.

Commission action and vote: the commission moved to adopt the ALJ’s proposed order as revised by the ALJ’s letter dated March 18, 2025, to deny the permit application of HK Real Estate Development LLC, and to adopt the executive director’s response to comments to the extent consistent with the commission’s decision. The motion passed; the roll call vote was recorded as unanimous in favor by the commissioners present.

What was not decided: the commission’s order does not establish a new general rule about intermittent or ephemeral streams beyond the facts of this record; it rests on the ALJ’s findings that the specific discharge route described in this application was not adequately characterized and that the ED had not analyzed the applicant’s later-proposed route.

Next steps and implications: the denial closes this permit application as presented. Commissioners and staff noted potential broader implications for other permits and for how intermittent channels are treated, but the order is grounded in this contested case record rather than a new policy pronouncement. The executive director and parties may follow up consistent with agency procedures.