Brazos River Authority and the State of Texas v. City of Houston And Sylvester Turner, in His Official Capacity as Mayor of the City of Houston ( 2021 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-20-00076-CV
Brazos River Authority and The State of Texas, Appellants
v.
City of Houston; and Sylvester Turner, in his Official Capacity as
Mayor of The City of Houston, Appellees
FROM THE 261ST DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-19-004189, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING
OPINION
This is a dispute over the right to construct and operate a reservoir on
Allens Creek. For over two decades, the City of Houston and the Brazos River Authority have
jointly held a water-appropriation permit authorizing them to construct the reservoir and to use
some of the water impounded there. In 2019, the Legislature instructed Houston to transfer its
entire interest in the proposed reservoir, including its permit rights, to the Authority. See Act of
May 16, 2019, 86th Leg., R.S., ch. 380, § 1, 2019 Tex. Gen. Laws 688, 688 (H.B. 2846). On
cross-motions for summary judgment, the district court granted declaratory relief that H.B. 2846
is “unconstitutional, void, and unenforceable.” We will affirm.
BACKGROUND
To provide context to the parties’ dispute, we begin with an overview of the
relevant statutory framework, found in Chapter 11 of the Water Code. Under Chapter 11, the
waters of Texas rivers, streams, and lakes are declared “the property of the state,” see Tex. Water
Code § 11.021(a), and “held in trust for the public,” see id. § 11.0235(a). The right to use state
water may be acquired by appropriation in the manner and for the purposes the chapter
prescribes. See id. §§ 11.022, .023. No one may appropriate state water or “begin construction
of any work designed for the storage, taking, or diversion of water” without a permit from the
Texas Commission on Environmental Quality. See id. § 11.121. In processing a permit
application, the Commission must comply with various procedural requirements, including
providing notice to senior water rights holders and the opportunity for a hearing. See id.
§§ 11.132, .133. The Commission may grant the application only after concluding, among other
things, that the proposed appropriation “is intended for a beneficial use.” See id.
§ 11.134(b)(3)(A). The permit may authorize an appropriation for a certain time or of permanent
duration. See id. §§ 11.135–.138.
A permanent water right is conditioned on ongoing “beneficial use” of the
appropriated water as set out in the permit. See id. § 11.135(a) (“The applicant’s right to take
and use water is limited to the extent and purposes stated in the permit.”). The appropriative
right is limited “not only to the amount specifically appropriated” in the permit, “but also to the
amount which is being or can be beneficially used for the purposes specified in the appropriation,
and all water not so used is considered not appropriated.” See id. § 11.025. Similarly, no
appropriative right is “perfected” until the water has been “beneficially used” for a purpose
specified in the permit. See id. § 11.026. And because “[n]o person is granted the right to waste
2
water by not using it,” Lower Colo. River Auth. v. Texas Dep’t of Water Res., 689 S.W.2d 873,
882 (Tex. 1984), an appropriative right is subject to forfeiture or cancelation for nonuse, see
Tex. Water Code §§ 11.030, .146, .171–.177, .183–.186. “But such rights continue to exist in
perpetuity to the extent beneficial use does.” Ware v. Texas Comm’n on Env’t Quality,
No. 03-14-00416-CV, 2017 WL 875307, at *1 (Tex. App.—Austin Mar. 3, 2017, no pet.) (mem.
op.). With this statutory framework in mind, we turn to the history of the case.
The site of the proposed reservoir is an approximately 9,500-acre tract located in
Austin County near the confluence of Allens Creek and the Brazos River. In 1974, the Texas
Water Commission (a predecessor of the Commission) granted Houston Power and Lighting
Company’s application for a permit to build a reservoir on the site. Water Appropriation Permit
2925 authorized HP&L to construct the reservoir and to use a certain amount of the water
impounded there. The reservoir was never built, and the Commission canceled the permit at
HP&L’s request. HP&L retained ownership of the site subject to an option to purchase held by
the Authority.
In 1999, the Legislature intervened to encourage development of a reservoir on
the site. The Legislature designated the site “as a site of unique value for the construction of a
dam and reservoir on Allens Creek” and found “that construction and development of the
Allens Creek Reservoir project” would be “in the public interest and would constitute
a beneficial use of the water.” Act of May 22, 1999, 76th Leg., R.S., ch. 1291, § 1.01,
1999 Tex. Gen. Laws 4426, 4426 (S.B. 1593). To that end, S.B. 1593 granted the Texas Water
Development Board (Board) “the right to construct a dam and reservoir on Allens Creek” and to
“divert and use from the reservoir an amount of water specified” in a permit to be issued by the
3
Commission. Id. § 1.02(a). Instead of having the Board apply for a new permit, S.B. 1593
instructed the Commission to
reissue without notice or hearing Water Appropriation Permit No. 2925
previously issued for the Allens Creek Reservoir. The permit shall be issued in
the name of the Texas Water Development Board and it shall have a priority date
of September 1, 1999. The date to commence construction of the reservoir shall
be not later than September 1, 2018. The [Commission1] may extend such time
for beginning of construction for good cause.
Id. § 1.02(b). To confirm the Commission’s authority, S.B. 1593 amended Chapter 11 to
authorize the Commission to reissue certain permits without notice or hearing. Id. § 2.01
(codified at Tex. Water Code § 11.1311).2
The Commission reissued the permit—now called Permit 2925A—to the Board in
February 2000. Meanwhile, the Authority exercised its option to purchase the reservoir site.
The Authority paid $150,000 and received a deed to the site, subject to payment of the full
purchase price. To secure financing for the site and the reservoir itself, the Authority turned to
Houston. Houston and the Authority executed an interlocal agreement specifying their
responsibilities. As an initial step, they agreed to jointly apply to the Water Board for a
$20,000,000 loan to finance purchase of the site, with Houston committing to pay 70% and the
Authority 30%. If the two were successful in obtaining the loan, the Authority agreed to convey
to Houston a 70% interest in the site. Next, they would jointly apply to the Commission to
reissue the permit jointly to them. Houston committed to pay 70% and the Authority 30% of the
1
S.B. 1593 names the Texas Natural Resource Conservation Commission, the
predecessor of the Commission on Environmental Quality.
2
Section 11.1311, which was added by S.B. 1593, does not mention Permit 2925 by
name but applies to “[a] permit for a reservoir project” that meets certain enumerated criteria.
See Tex. Water Code § 11.1311(a). There is no suggestion that any other permit meets
that criteria.
4
development and construction costs, with each party receiving a proportionate share of the water
appropriated by the permit.
The Water Board granted the loan application the same year. The Authority
recorded its deed to the site but did not convey any interest to Houston. The Commission
subsequently issued an amended Permit 2925A jointly to Houston and the Authority.3 The
permit required that construction begin no later than September 1, 2018, and finish within three
years. Failure to meet either deadline would cause the permit “to expire and become null and
void” unless the Commission granted an extension.
However, construction could not start immediately. The permit required the
holders to design the reservoir, undertake a habitat mitigation study in cooperation with the
Texas Parks and Wildlife Department, and develop a plan to mitigate the environmental effects
of the reservoir. The design would have to comply with standards laid out in the Commission’s
rules, and the plans would have to be submitted to the Executive Director of the Commission for
approval “prior to beginning construction.” In addition to these state-law requirements, federal
law required the parties to obtain a permit pursuant to Section 404 of the Clean Water Act from
the Army Corps of Engineers. Houston and the Authority executed a memorandum of
understanding with the Texas Parks and Wildlife Department as an initial step towards meeting
these requirements. The studies had not been completed as of the date of trial, and the two have
not begun the process for acquiring the Section 404 permit. As the September 2018 deadline
approached, Houston and the Authority requested an extension from the Legislature. In 2011,
the Legislature agreed and directed the Commission to reissue the permit with a September 1,
3
The Water Development Board also retained an interest in the permit.
5
2025 deadline to begin construction. See Act of May 19, 2011, 82d Leg., R.S., ch. 434, § 2, sec.
1.06, 2011 Tex. Gen. Laws 1104, 1104 (S.B. 1132). The Commission issued an amended
permit—now called Permit 2925B—reflecting the new deadline.
The permittees made no further progress developing the reservoir by the time the
Legislature held hearings on H.B. 2846 in 2019. Representatives of the Authority, Houston, and
other interested entities testified. David Collingsworth, the Authority’s general manager,
testified that Houston was uninterested in funding the project because it did not need additional
water. Collingsworth testified that the Authority, in contrast, needs additional water to meet the
needs of its customers in the region. Carol Haddock, Houston’s Director of Public Works,
testified that Houston “did not necessarily fully appreciate the urgency of our partners” but was
committed to the project. She estimated that Houston had spent approximately twenty-three
million dollars on it to date. Other stakeholders testified in support of the bill and regarding the
need for a reservoir in the area.
H.B. 2846 passed the Legislature and was signed into law. It amends S.B. 1593
to provide:
Sec. 1.07. (a) Notwithstanding any other provision of this article, not later than
January 1, 2020, the City of Houston shall enter into a contractual agreement with
the Brazos River Authority to transfer to the Brazos River Authority all of the
city’s ownership interests in the Allens Creek Reservoir project, including all
required water right permits, along with the responsibility to construct the project
in accordance with all associated statutory requirements and deadlines.
(b) Construction of the reservoir is subject to the Brazos River Authority
obtaining all necessary federal permits.
(c) In addition to other necessary provisions, the contractual agreement described
by Subsection (a) must include provisions for the transfer of an amount not to
exceed $23 million from the Brazos River Authority to the City of Houston.
6
H.B. 2846, § 1, sec. 1.07, 2019 Tex. Sess. Law Serv. at 688.
Shortly after H.B. 2846’s effective date, the Authority sent Houston a proposed
amendment to the Interlocal Agreement reflecting H.B. 2846’s terms. Houston responded by
suing the State and the Authority for declaratory relief that H.B. 2846 is invalid on multiple
grounds. See Tex. Civ. Prac. & Rem. Code § 37.004(a) (authorizing suit for declaratory relief
concerning validity of statutes). Houston filed a traditional motion for summary judgment, and
the State and the Authority jointly filed a cross-motion for traditional summary judgment.4
Houston separately filed objections to many of the exhibits attached to the cross-motion. The
district court granted summary judgment to Houston and rendered declaratory relief that
H.B. 2846 violates the Texas Constitution’s prohibitions on retroactive laws, local or special
laws, and the forced sale of government property. The district court further concluded that
H.B. 2846 is unenforceable because it “violates [Sections 272.001 and 552.020] of the Local
Government Code.” Based on these declarations, the district court rendered judgment that
H.B. 2846 “in its entirety is unconstitutional, void, and unenforceable.” In a separate order, the
district court sustained Houston’s evidentiary objections in part and overruled them in part. The
State and the Authority have appealed to this Court.
EVIDENTIARY RULINGS
Before turning to the merits of the parties’ cross-motions for summary judgment,
we must determine what evidence is properly before us. The district court sustained Houston’s
objections to, as relevant here, the transcript of a hearing before the Committee on Natural
4
The Authority also filed a third-party claim against Sylvester Turner, Mayor of the City
of Houston, alleging that he acted ultra vires by refusing to execute the contract. The district
court dismissed that claim for want of jurisdiction after concluding that H.B. 2846
is unconstitutional.
7
Resources of the Texas House of Representatives on H.B. 2826 and the 2016 Region H Water
Plan (2016 Plan). Appellants invite us to take judicial notice of both exhibits. See Office of Pub.
Util. Counsel v. Public Util. Comm’n of Tex., 878 S.W.2d 598, 600 (Tex. 1994) (“A court of
appeals has the power to take judicial notice for the first time on appeal.”). We will grant
their request.
A court may take judicial notice of “a fact that is not subject to reasonable dispute
because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be
accurately and readily determined from sources whose accuracy cannot reasonably be
questioned.” Tex. R. Evid. 201(b). Houston argues that we may not take judicial notice of the
transcript because it contains speculation. Specifically, Houston argues that the witnesses and
legislators speculated as to Houston’s intentions regarding the project. Leaving aside the
question of whether those individual statements have evidentiary value, the fact that stakeholders
testified regarding the need for the proposed reservoir and their concerns about H.B. 2846 is a
matter of legislative record and not subject to reasonable dispute. See id. We take judicial notice
of the transcript and will incorporate it into our discussion of the merits of this appeal.5 See
Zaatari v. City of Austin, 615 S.W.3d 172, 187 (Tex. App.—Austin 2019, pet. denied) (taking
judicial notice of hearing testimony and other legislative history pertaining to challenged
municipal ordinance); see also City of El Paso v. Fox, 458 S.W.3d 66, 72 (Tex. App.—El Paso
2014, no pet.) (taking judicial notice of minutes of city council that were publicly available on
council’s website).
5
We note that the district court overruled Houston’s objections to transcripts of two
other committee hearings on H.B. 2846, both of which contain similar testimony.
8
Houston does not address whether we may properly take judicial notice of the
2016 Plan. We take judicial notice of the 2016 Plan because it is a matter of public record and
its accuracy is undisputed.6 See Office of Pub. Util. Counsel, 878 S.W.2d at 600 (authorizing
courts to take judicial notice of records on file with state agencies that are capable of accurate
and ready determination and whose accuracy cannot reasonably be questioned); see also MCI
Sales & Serv., Inc. v. Hinton, 329 S.W.3d 475, 485 n.7 (Tex. 2010) (taking judicial notice of
report issued by federal agency).
DISCUSSION
We now turn to whether the district court correctly granted summary judgment to
Houston and declared that H.B. 2846 is void and unenforceable.
Standard of Review
Summary judgment is proper when there are no disputed issues of material fact
and the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); AEP Tex.
Cent. Co. v. Arredondo, 612 S.W.3d 289, 293 (Tex. 2020). We review an order granting
summary judgment de novo, “taking as true all evidence favorable to the nonmovant and
indulging every reasonable inference in the nonmovant’s favor.” AEP Tex., 612 S.W.3d at 293.
When both parties move for summary judgment on the same issue, “we consider the evidence
presented by both parties and determine all questions presented,” rendering the judgment the trial
6
Every five years, the Water Board adopts a state water plan incorporating regional
water plans submitted by planning groups in different parts of the state. See Tex. Water Code
§§ 16.051(a), .053. Region H is the planning area that includes Houston and the proposed
Allens Creek Reservoir. The 2016 Plan details the anticipated uses of water from all sources in
the region, including the proposed Allens Creek Reservoir. It also describes the regulatory steps
that must be completed before construction can begin.
9
court should have rendered. See Bush v. Lone Oak Club, LLC, 601 S.W.3d 639, 646–47
(Tex. 2020).
A question of statutory construction is a legal one, which we also review de novo.
Id. Our goal in construing a statute is to ascertain and give effect to the Legislature’s intent,
looking first to the “plain and common meaning of the statute’s words.” Id. (citing MCI Sales
& Serv., Inc. v. Hinton, 329 S.W.3d 475, 500 (Tex. 2010)). In discerning a statute’s plain and
common meaning, we “consider the context and framework of the entire statute and construe it
as a whole.” Aleman v. Texas Med. Bd., 573 S.W.3d 796, 802 (Tex. 2019) (citing Cadena
Comercial USA Corp. v. Texas Alcoholic Beverage Comm’n, 518 S.W.3d 318, 326 (Tex. 2017)).
Statutory Claims
We begin with the district court’s conclusion that H.B. 2846 is invalid because it
“violates [sections 272.001 and 552.020] of the Local Government Code.”7 See Tex. Loc. Gov’t
Code §§ 272.001(a) (requiring any “political subdivision of the state” to provide notice before
transferring land unless enumerated exception applies), 552.020 (regulating water supply
contracts between water districts and municipalities). Appellants argue that the district court
erred because there is no conflict or, if one exists, H.B. 2846 controls. Houston responds that
H.B. 2846 is invalid in that it requires Houston to execute a contract that violates sections
272.001 and 552.020 of the Local Government Code. We agree with appellants.
Houston’s argument is essentially that H.B. 2846 is invalid because it modifies
sections 272.001 and 552.020. But the “Legislature’s power to amend or repeal an earlier statute
7
We address this ground for summary judgment first because it does not require us to
decide whether H.B. 2846 is constitutional. See In re B.L.D., 113 S.W.3d 340, 349 (Tex. 2003)
(“As a rule, we only decide constitutional questions when we cannot resolve issues on
nonconstitutional grounds.”).
10
is generally limited only by federal or state constitutional provisions or federal law.” Graphic
Packaging Corp. v. Hegar, 538 S.W.3d 89, 104 (Tex. 2017). “When statutes irreconcilably
conflict, traditional rules of statutory construction dictate that the later enacted and more specific
legislation should control.” Id. at 98. H.B. 2846 requires a single municipality to execute a
contract with the Authority that contains specified terms. By contrast, Section 272.001 requires
any “political subdivision of the state” to provide notice before transferring land unless an
exception applies, Tex. Loc. Gov’t Code § 272.001(a), and Section 552.020 applies generally to
water–supply contracts between municipalities and water districts, id. § 552.020. These
requirements first appeared in 1987. See Act of May 15, 1987, 70th Leg., R.S., ch. 149, § 1,
1987 Tex. Gen. Laws 707, 1055–56, 1243–44. Assuming that a conflict exists, H.B. 2846
controls because it is the later-enacted and more specific provision. See Hegar, 538 S.W.3d at
98 (“As the later-enacted, more specific statute, section 171.106 prevails.”); Jackson v. State Off.
of Admin. Hearings, 351 S.W.3d 290, 297 (Tex. 2011) (holding later-enacted and more specific
statute controlled). The district court erred by overturning H.B. 2846 based on its conclusion
that the legislation violates sections 272.001 and 552.020 of the Local Government Code.8
8
Houston also argues that the district court found that H.B. 2846 “also violates the Texas
Local Government Code through [the Authority’s] Enabling Act.” The Authority’s enabling act
is codified in the Special District Local Laws Code, not the Local Government Code. See
generally Tex. Spec. Dist. Code §§ 8502.001–.020. But even if we were to assume that the
district court’s declaration also encompasses this statute, we would still reject Houston’s
argument. Houston argues that H.B. 2846 violates a provision authorizing the Authority to
“execute contracts with municipalities in the state substantially in the manner prescribed by
Section 552.020, Local Government Code[.]” See id. § 8502.006(c). H.B. 2846—which is more
recent and pertains to a single contract—would prevail over that provision of the Authority’s
Enabling Act. See Graphic Packaging Corp. v. Hegar, 538 S.W.3d 89, 98 (Tex. 2017) (“When
statutes irreconcilably conflict, traditional rules of statutory construction dictate that the later
enacted and more specific legislation should control.”).
11
Constitutional Challenges
In considering Houston’s constitutional challenges to H.B. 2846, we begin with a
presumption that the statute is valid. See In re Commitment of Fisher, 164 S.W.3d 637, 645
(Tex. 2005) (“An analysis of the constitutionality of a statute begins with a presumption of
validity.”). We start with Houston’s claim that H.B. 2846 is unconstitutionally retroactive
because it is dispositive.
The Texas Constitution prohibits the creation of retroactive laws. See Tex. Const.
art. I, § 16 (“No bill of attainder, ex post facto law, retroactive law, or any law impairing the
obligation of contracts, shall be made.”). “A retroactive law is one that extends to matters that
occurred in the past.” Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698, 707 (Tex. 2014); see also
Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 55 (Tex. 2014) (“We have defined a
retroactive law as ‘a law that acts on things which are past.’” (quoting Subaru of Am., Inc.
v. David McDavid Nissan, Inc., 84 S.W.3d 212, 219 (Tex. 2002))). Appellants both argue
that H.B. 2846 is not retroactive but present different arguments in support of their
respective contentions.
The Authority argues that nothing in H.B. 2846 defeats the presumption that
statutes apply prospectively. Although the Authority is correct that courts “generally presume
that statutes are prospective unless they are expressly made retroactive,” City of Austin
v. Whittington, 384 S.W.3d 766, 790 (Tex. 2012), no specific language is required to defeat this
presumption. Instead, courts construe the statutory text to determine the Legislature’s intent.
See In re M.C.C., 187 S.W.3d 383, 384 (Tex. 2006) (per curiam) (explaining that statutes are
“applied retroactively if the statutory language indicates that the Legislature intended that the
statute be retroactive”). Construing H.B. 2846 as a whole, we agree that it has retroactive effect.
12
As we explain in greater detail below, the Commission’s grant of Permit 2925B conveyed a
constitutionally protected property interest, which H.B. 2846 eliminated. See Texas Water
Rights Comm’n v. Wright, 464 S.W.2d 642, 648 (Tex. 1971) (holding statute authorizing
forfeiture of water rights after period of nonuse applied retroactively because of its “definite
impact on rights created before the effective date of the statute”); Zaatari, 615 S.W.3d at 188
(holding municipal ordinance banning short-term rentals retroactive because it “operates to
eliminate well-established and settled property rights that existed before the ordinance’s
adoption”); see also Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 139 (Tex. 2010)
(noting that “[m]ost statutes operate to change existing conditions” (citing Wright, 464 S.W.2d
at 648)).
The State argues that H.B. 2846 does not change the “legal significance of actions
Houston took in the past.” To the extent the State means that a law is only retroactive if it
changes the effect of past conduct, we disagree. The Texas Constitution’s ban on retroactive
laws is a “general prohibition” on applying laws to “matters which have occurred in the past[.]”
Id. at 138. Thus, whether H.B. 2846 is retroactive does not turn on whether it changes the
consequences of Houston’s past “actions.”9
9
We observe that the State relies on a case—Ramirez v. State, 184 S.W.3d 392, 395
(Tex. App.—Dallas 2006, no pet.)—applying the constitutional prohibition on ex post facto
laws. See Tex. Const. art. I, § 16 (“No bill of attainder, ex post facto law, retroactive law, or any
law impairing the obligation of contracts, shall be made.”). The prohibition on ex post facto
laws concerns legislation imposing punishment for past acts. Rodriguez v. State, 93 S.W.3d 60,
67 (Tex. Crim. App. 2002) (“[T]he mark of an ex post facto law is the imposition of what can
fairly be designated punishment for past acts.” (citing De Veau v. Braisted, 363 U.S. 144, 160
(1960))). Because H.B. 2846 is not a criminal statute, the ex post facto provision does not apply
here. See Barshop v. Medina Cnty. Underground Water Conservation Dist., 925 S.W.2d 618,
633 (Tex. 1996) (“It is well established that the prohibition against ex post facto laws applies
only to retroactive criminal or penal laws.”).
13
Next, the State argues that H.B. 2846 is not unconstitutionally retroactive because
Houston’s right in the permit, if any, is not “vested.” Traditionally, courts concluded a law was
unconstitutionally retroactive if it “takes away or impairs vested rights[.]” Subaru of Am.,
84 S.W.3d at 219 (citing Ex parte Abell, 613 S.W.2d 255, 260 (Tex. 1981); McCain v. Yost,
284 S.W.2d 898, 900 (Tex. 1955)). But as the State acknowledges elsewhere in its brief, the
supreme court expressly rejected this test, explaining that “[w]hat constitutes an impairment of
vested rights is too much in the eye of the beholder to serve as a test for unconstitutional
retroactivity.” Robinson, 335 S.W.3d at 143. Instead, courts consider three factors in light of the
prohibition’s dual objectives of “protect[ing] the people’s reasonable, settled expectations”—i.e.,
that “the rules should not change after the game has been played,” and “protect[ing] against
abuses of legislative power.” See id. at 138 (citing Landgraf v. USI Film Prods., 511 U.S. 244,
265–66 (1994)). Those factors are: (1) “the nature and strength of the public interest served by
the statute as evidenced by the Legislature’s factual findings;” (2) “the nature of the prior right
impaired by the statute;” and (3) “the extent of the impairment.” Id. at 145. This test
acknowledges the heavy presumption against retroactive laws by requiring a compelling public
interest to overcome the presumption. Tenet Hosps., 445 S.W.3d at 707. But it also
appropriately encompasses the notion that “statutes are not to be set aside lightly.” Id. (citing
Robinson, 335 S.W.3d at 146).
We first consider whether H.B. 2846 serves a compelling public interest “as
evidenced by the Legislature’s factual findings.” See Robinson, 335 S.W.3d at 145. Houston
argues that the absence of findings is “fatal” to the statute’s constitutionality. However, the
Court in Robinson considered the entire legislative record and additional related information, see
id., and we have done the same in subsequent cases, see Zaatari, 615 S.W.3d at 189 (considering
14
legislative record and other pertinent information when applying Robinson test); Texas Educ.
Agency v. American YouthWorks, Inc., 496 S.W.3d 244, 264 n.111 (Tex. App.—Austin 2016),
aff’d sub nom. Honors Acad., Inc. v. Texas Educ. Agency, 555 S.W.3d 54 (Tex. 2018) (same).
Considering the legislative record and the other pertinent evidence in the record, we conclude
that the public interest served by H.B. 2846 is slight.
Appellants argue that H.B. 2846 is in the public interest because it is necessary to
discharge the Legislature’s constitutional duty to conserve the State’s natural resources. See
Tex. Const. art. XVI, § 59(a) (“The conservation and development of all of the natural resources
of this State . . . [is] hereby declared [a] public right[ ] and dut[y]; and the Legislature shall pass
all such laws as may be appropriate thereto.”). They argue that the record demonstrates that the
Legislature reasonably determined that Houston should be removed from the project and that we
should defer to that determination as in the public interest.
We agree that constructing the reservoir is in the public interest. In addition to the
findings in S.B. 1593, the legislative record of H.B. 2846 demonstrates the need for a reservoir in
the region.10 We also agree that the record demonstrates that the Legislature acted out of
concern for the delays in developing and constructing the proposed reservoir. Cf. Robinson,
335 S.W.3d at 150 (noting that it “[a]ccept[s] the legislative record as indicating the reasons for
[the Legislature’s] actions”). However, nothing in the record supports a conclusion that
H.B. 2846 resolves these concerns.
10
For example, Brazoria County Judge Matt Sebasta testified that the inability to obtain
“firm water” resources threatens the county’s population growth. Tony Bennet, President of the
Texas Association of Manufacturers, testified that the availability of affordable water rights is
crucial to the region’s economy. A representative of Dow Chemical agreed, adding that his
company twice decided against expanding in the region because of the scarcity of reliable
water access.
15
Permit 2925B provides that failure to begin construction by September 1, 2025,
renders the permit null and void. To reach that point, the Authority must first obtain a variety of
regulatory authorizations. According to the 2016 Plan, these include:
• obtaining a permit under Section 404 of the Clean Water Act,
• obtaining a National Environmental Policy Act Environmental Impact
Statement,
• completing a Cultural Resources Survey and National Register of Historic
Places testing,
• developing a plan to mitigate the impact of the reservoir on the waters and
wetlands of the United States, and
• completing ancillary studies required by the United States Fish and Wildlife
Service and the Texas Parks and Wildlife Department to determine the
presence of endangered species on the site and to assess the impact of
the project.
The 2016 Plan estimates a “10-year schedule” to complete these steps and an additional
two-and-a-half- to three-and-a-half year allowance to design and construct the reservoir itself.
David Collingsworth, the Authority’s general manager and CEO, told the Legislature in 2019
that the permitting process would begin “in the next twelve months” and be complete within
“5-7 years,” followed by three years of construction. In all, he estimated that “we are looking at
a 10-year project here if, if all the stars align and everything goes right.”
But even if Houston had transferred its interest to the Authority by the
January 1, 2020, deadline, and the Authority had started the process immediately, less than five
years would have remained until the September 1, 2025 deadline to begin construction. Neither
appellant suggests that H.B. 2846’s statement that construction is subject to the Authority
obtaining “all necessary federal permits” modifies that deadline, and we do not interpret it that
16
way. When the Legislature passed S.B. 1132 to extend the construction deadline, it did so in
express terms:
Time Limitation No. 7.a. in Permit No. 2925A issued by the Texas Natural
Resource Conservation Commission, the predecessor agency to the Texas
Commission on Environmental Quality, to the Texas Water Development Board
is amended to require that construction of the Allens Creek Reservoir commence
on or before September 1, 2025, and be completed not later than the fifth
anniversary of the date construction of the reservoir commences.
S.B. 1132, § 1, sec. 1.06 (a), 2011 Tex. Gen. Laws at 1104. If the Legislature intended in
H.B. 2846 to extend the deadline, it could easily have done so. See Zanchi v. Lane,
408 S.W.3d 373, 380 (Tex. 2013) (noting that if the Legislature had intended service-of-citation
rules to apply to service of expert reports in suits over health care liability claims, it “knew how
to do so”).
The permit would not expire if the Authority timely applied for an extension and
the Commission subsequently granted one. However, an extension is not available as of right
under the Commission’s rules. The Commission “may grant” an extension if the permit holder
explains why construction “could not be commenced or completed within the time required” and
demonstrates they acted with “reasonable diligence” to begin or complete construction on time.
See 30 Tex. Admin. Code § 295.72(b) (Texas Comm’n on Envt’l Quality, Applications for
Extension of Time). The parties did not utilize this procedure in 2011 but rather sought an
extension from the Legislature. At oral argument, the Authority agreed that it will likely need to
return to the Legislature for an extension of the construction deadline.
Given the likelihood that Permit 2925B will expire unless the Legislature or the
Commission takes further action, H.B. 2846 itself does little to advance construction of the
reservoir. Appellants disagree, arguing that H.B. 2846 is necessary because the reservoir will
17
never be built if Houston is involved. Houston responds that the record does not support this
view, attributing much of the delay to litigation over the Authority’s application for a separate
permit to appropriate additional water from the proposed reservoir. Houston and the Authority
reached a settlement in 2014 where they agreed to begin developing the reservoir after the
Authority’s new permit became final and unappealable, which occurred four years later.11
Setting aside whether the record supports either characterization of Houston’s involvement, the
fact that removing Houston from the project has a rational relation to constructing the Allens
Creek Reservoir does not automatically render H.B. 2846 constitutional. See Maple Run at
Austin Mun. Util. Dist. v. Monaghan, 931 S.W.2d 941, 947 (Tex. 1996) (rejecting argument that
“any law having a conservation purpose” necessarily does not violate constitutional prohibition
on local or special laws); see also Robinson, 335 S.W.3d at 145 (reiterating that retroactive
legislation is not exempt “from the constitutional prohibition merely because there was a
rational basis for its enactment, or even because, on balance, it is likely to do more good than
harm”). The Legislature made no findings to justify H.B. 2846, and, based on the record before
us, we conclude the public interest served is slight. Compare Tenet Hosps., 445 S.W.3d at 707
(holding that retroactive provision of legislation that “was a comprehensive overhaul of Texas
medical malpractice law” served compelling public interest), and Synatzske, 438 S.W.3d at 58
(holding that retroactive legislation aimed at resolving asbestos-related litigation crisis and
supported by legislative fact findings served compelling public interest), with Robinson,
335 S.W.3d at 143–44 (holding that retroactive legislation ostensibly enacted for sole benefit of
one entity and not supported by legislative fact findings did not serve compelling public interest).
11
We discuss this dispute in more detail in our consideration of the second
Robinson factor.
18
Even if we were to conclude that H.B. 2846 serves a compelling interest, our
consideration of the remaining Robinson factors—which require us to balance the purpose
against the nature of the prior right and the extent to which the statute impairs that right—would
still result in our conclusion that the statute is unconstitutionally retroactive. See Robinson,
335 S.W.3d at 147–48. Regarding the nature of the prior right, we consider the extent to which
the impaired right was “settled.” Id. at 142–43, 147, 149.
The dissent argues that we should begin by analyzing whether Houston’s permit
right is vested. In the dissent’s view, Robinson did not “vitiate the need to evaluate whether the
prior right is vested” but rather taught that a showing of vested rights is not always required.
Post at ___. Surveying decades of case law, the dissent argues that the prohibition on retroactive
legislation “broadly protects rights” of individual and private entities—even if those rights are
not vested—but protects a narrower class of rights held by municipal corporations and other
political subdivisions. Id. at ___. The dissent “conclude[s] that when a municipal corporation
asserts a prior right against the State to challenge a retroactive law as unconstitutional, the
municipal corporation generally needs to demonstrate that the nature of its prior right against the
State is a vested property right as a threshold requirement to trigger the Robinson” balancing test.
Id. at ___.
We read Robinson differently. Generally, before any constitutional rights attach,
a litigant must possess a “liberty or property interest that is entitled to constitutional protection.”
Klumb v. Houston Mun. Emps. Pension Sys., 458 S.W.3d 1, 15 (Tex. 2015). A constitutionally
protected interest “must be a vested right, which is ‘something more than a mere expectancy
based upon an anticipated continuance of an existing law.’” Id. (quoting City of Dallas
v. Trammell, 101 S.W.2d 1009, 1014 (Tex. 1937)). The term “vested right” had a “special
19
meaning” in the retroactivity context prior to Robinson, 335 S.W.3d at 140. Surveying its
precedents applying the impairs-vested-rights test, the supreme court observed that “there are
vested rights and then there are vested rights, and not all laws which may fairly be said
to retroactively impair vested rights are constitutionally prohibited.” Id. at 142. In the
court’s estimation:
The dispute over whether to call something a vested right appears driven not so
much by what the words mean as by the consequence of applying the label—that
its impairment is prohibited. Or as one commentator has put it: “it has long been
recognized that the term ‘vested right’ is conclusory—a right is vested when it has
been so far perfected that it cannot be taken away by statute.”
Id. at 143 (internal footnote omitted). The supreme court therefore discarded the impairs-vested-
rights test in favor of the balancing test. See id. (“What constitutes an impairment of vested
rights is too much in the eye of the beholder to serve as a test for unconstitutional retroactivity.”);
In re Occidental Chem. Corp., 561 S.W.3d 146, 161 (Tex. 2018) (orig. proceeding) (explaining
that Robinson “expressly rejected the vested-rights test”). While Robinson discarded the “special
meaning” the term “vested” had taken on in retroactivity jurisprudence, it preserved the
requirement that litigants possess an interest that is vested in the sense that is “more than a mere
expectancy based upon an anticipated continuance of an existing law.” See, e.g., Honors Acad.,
555 S.W.3d at 61. Every litigant who challenges a law as unconstitutionally retroactive must
possess an interest that is “vested” in this sense. See id. at 61–69 (evaluating, for purposes of
due process and retroactivity claims, whether charter school operator’s interest in charter rose to
that level).
To support its argument that that municipalities must possess an interest that is
vested in the sense rejected in Robinson, the dissent turns to the general rule that “Municipal
20
Corporations do not acquire vested rights against the State” but that the “Legislature cannot by
retroactive legislation applicable to municipal corporations destroy or impair vested rights which
persons have acquired in their relationships with the municipal corporations.” Deacon v. City of
Euless, 405 S.W.2d 59, 62 (Tex. 1966). In Milam County v. Bateman—which addressed
counties as political subdivisions of the State—the supreme court stated that:
[T]he political rights and privileges delegated to counties are not within the
constitutional prohibitions against retroactive laws and those which impair vested
rights. A different principle, however, obtains as regards the rights of counties to
property which they may acquire. Such rights, as a general rule, are protected by
the same constitutional guarantees which shield the property of individuals.
54 Tex. 153, 165–66 (Tex. 1880); see also Texas Antiquities Comm. v. Dallas Cnty. Cmty. Coll.
Dist., 554 S.W.2d 924, 930 (Tex. 1977) (plurality op.) (applying Milam County); Love v. City of
Dallas, 40 S.W.2d 20, 27 (Tex. 1931) (holding that even though school district had no vested
right to continue operating, “the public that it represents has a vested right in the municipal
property acquired for its benefit”). The dissent would proceed to determine whether Houston’s
permit rights are “property” within the meaning of these decisions. We respectfully decline to do
so because neither appellant argues that Houston’s status as a municipal corporation affected the
nature of its right. And we are not required to address it because the rule announced in these
cases does not necessarily implicate standing. See Wilson v. Andrews, 10 S.W.3d 663, 669 (Tex.
1999) (repudiating dicta in Proctor v. Andrews, 972 S.W.2d 729, 734 (Tex. 1998), which had
agreed with court of appeals that city lacked standing to raise due process and equal protection
challenges because municipalities do not enjoy due process rights); Stop the Ordinances Please
v. City of New Braunfels, 306 S.W.3d 919, 929 (Tex. App.—Austin 2010, no pet.) (noting that
“plaintiff is not required to allege the deprivation of a ‘vested right’ constituting a due-process
21
violation to demonstrate the requisite infringement of a ‘legally protected interest’”).12 Instead,
we evaluate the case as it has been presented to us by the parties.
We now turn to determining Houston’s interest.13 Constitutionally protected
property interests “are created and their dimensions are defined by existing rules or
understandings that stem from an independent source such as state law[.]” Honors Acad.,
555 S.W.3d at 61 (citing Board of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)).
Appellants argue that the supreme court has already settled this issue by holding that no one has
protected rights in unused water rights. E.g., Wright, 464 S.W.2d at 648 (explaining permittees
were not “vested with the right of non-use of the water”). In this view, a water-appropriation
permit is no more than a right to acquire water rights in the future through use. We disagree.
First, the text of Permit 2925B clearly contemplates a lengthy process of
development and construction before use of the appropriated water. In addition to the federal
regulatory requirements, the permit requires the holders to submit to the Commission a federally
12
The dissent argues that we must perform this analysis because Robinson directs a
reviewing court to consider the nature of the prior right, and the Authority and Houston both
challenge whether Houston’s permit rights are entitled to protection. We agree that we must
determine whether the prior right is entitled to protection, but we are not required to fashion an
argument on a party’s behalf. See In re Thompson, 330 S.W.3d 411, 424 (Tex. App.—Austin
2010, orig. proceeding) (explaining that “it is not court’s duty to ‘fashion a legal argument . . .
when [party] has failed to do so’ and that it is inappropriate for appellate court to ‘speculate as to
what [party] may have intended to raise’” (quoting Canton-Carter v. Baylor Coll. of Med.,
271 S.W.3d 928, 931 (Tex. App.—Houston [14th Dist.] 2008, no pet.))). We therefore decline
to address whether Houston’s status as a municipality affects whether its prior right is
enforceable. Cf. Wilson v. Andrews, 10 S.W.3d 663, 669 (Tex. 1999) (explaining city had
standing to assert due process claim and choosing to “assume without deciding that government
entities can raise due process and equal protection challenges and confront the merits of its
constitutional challenges.”).
13
To avoid confusion, we will refrain from using the term “vested” any further in
determining the nature of Houston’s prior right. See Zaatari v. City of Austin, 615 S.W.3d 172,
190 (Tex. App.—Austin 2019, pet. denied) (“Regarding the nature of the prior right, we consider
not whether the impaired right was ‘vested,’ but the extent to which that right was ‘settled.’”).
22
approved plan to mitigate the environmental effects, design the reservoir and obtain the
Commission’s approval of the designs, and obtain the Commission’s approval of conservation
and drought contingency for the facility.
Second, Chapter 11 does not support appellants’ view of a water-appropriation
permit. Although there is no doubt that “[n]o person is granted the right to waste water by not
using it,” Lower Colo. River Auth., 689 S.W.2d at 882, Chapter 11 contemplates that using some
water rights will require permit holders to construct the necessary facilities. The statute sets
default deadlines to begin construction, see Tex. Water Code § 11.145, and authorizes
cancellation of a permit if the permittee fails to begin construction on time, see id. § 11.146.14
The Commission may issue temporary permits reallocating water rights while the development
process is ongoing unless “the issuance of the permit will jeopardize financial commitments
made for water projects that have been built or that are being built to optimally develop the water
resources of the area.” See id. § 11.1381(b). Additionally, the statute exempts from cancelation
for nonuse permits that were “obtained as the result of the construction of a reservoir funded, in
whole or in part, by the holder of the permit.” See id. § 11.173(b)(4); 30 Tex. Admin. Code
§ 297.71(b)(6) (2021) (Texas Comm’n on Env’t Quality, Cancelation in Whole or in Part).
These provisions apply fully to Permit 2925B despite the unique way it was
issued. Section 11.1311 provides that a permit issued pursuant to that section—which Permit
2925B was—“shall be administered in accordance with this chapter and as otherwise provided
by law.” Tex. Water Code § 11.1311(c). Construed as a whole, Chapter 11 clearly indicates that
a permit such as Houston’s is more than a mere expectation that the permit holder will one day
14
Section 11.146 does not apply to a permit to construct a reservoir that, like the Allens
Creek proposal, can hold more than 50,000 acre-feet of water. See Tex. Water Code § 11.146(g).
23
acquire protected rights. See Honors Acad., 555 S.W.3d at 61 (“To have a constitutionally
protected property interest, a person must have a ‘legitimate claim of entitlement’ rather than a
mere ‘unilateral expectation.’” (quoting Roth, 408 U.S. at 577)); see also American YouthWorks,
496 S.W.3d at 260 (explaining that “[s]ome substantive limit on the State’s discretion” to revoke
benefit “is an essential characteristic of a property interest warranting constitutional protection”
(citing Grounds v. Tolar Indep. Sch. Dist., 856 S.W.2d 417, 418 (Tex. 1993)).15
Wright and the supreme court’s other cases involving property rights in water
permits do not alter our conclusion. Wright involved a challenge to a statute authorizing
cancelation of a water permit after ten years of nonuse. 464 S.W.2d at 642. The supreme court
agreed that the statute was retroactive because it impacted rights that existed before the statute’s
effective date. Id. at 648. Rejecting the permit holders’ arguments that their permits did not
require them to use the water, the court explained that a permit “by definition” conveys “only the
right to use the water for beneficial purposes.” Id. at 647. “Inherently attached to a permit to
appropriate waters, therefore, is the duty that the appropriator will beneficially use the water.”
Id. at 648. Thus, the permittees could reasonably expect enforcement of conditions inherently
attached to their permits, and the permits themselves carried no right to be forever free of a
remedy to enforce those conditions. Id.
15
Houston argues that the effect of these provisions is that Houston is entitled to retain
its permit until it expires unless the Commission cancels it through the procedure laid out in
Chapter 11. Appellants respond that Chapter 11 “makes no difference” to Houston’s claim
because the Legislature is not bound by its own statutes. We agree with appellants to the extent
that Chapter 11 does not prevent the Legislature from acting to cancel Houston’s permit outside
the context of Chapter 11. See Hegar, 538 S.W.3d at 104 (“[A]s a general rule, one ‘legislature
cannot prevent future legislatures from amending or repealing a statute.’” (quoting Central
Power & Light Co. v. Public Util. Comm’n of Tex., 649 S.W.2d 287, 289 (Tex. 1983))). But
Chapter 11 is not irrelevant—it shapes the contours of Houston’s property interest.
24
The supreme court later rejected a retroactivity challenge to the Edwards Aquifer
Act for similar reasons. See Barshop v. Medina Cnty. Underground Water Conservation Dist.,
925 S.W.2d 618, 633–34 (Tex. 1996). Before the Act, withdrawal of groundwater from the
aquifer was unrestricted. Id. at 624. The Act created an Authority to regulate groundwater
withdrawals and, among other things, capped annual withdrawals and restricted withdrawals
under a permit based on the owner’s historic use. Id. The court upheld the Act despite its
retroactive effect because the landowners could have no settled expectation “that a limited
resource like groundwater, affected by public and private interests, will not require allocation[.]”
See Robinson, 335 S.W.3d at 145 (discussing Barshop, 925 S.W.2d at 633–34).
Houston’s interest in Permit 2925B is more settled. Unlike the property owners in
Barshop, Houston is relying on a permit allocating it a specific amount of water. And unlike the
permits at issue in Wright, Houston’s permit contemplates a period of nonuse of the appropriated
water. Houston could reasonably expect to rely on the terms of the permit. Appellants disagree,
arguing that Houston could have no settled expectations in a permit it had not used and had
refused to fund for two decades. However, the record shows that Houston could reasonably
expect that the development process would not begin until 2018. In 2002—two years after the
Commission reissued the permit jointly to the parties—the Authority filed with the Commission
a separate application for a “System Operations Permit.” This application requested numerous
authorizations, including a new appropriation of 400,000 acre-feet of state water. The new
appropriation included additional water from the proposed Allens Creek Reservoir. Securing
that portion of the appropriation required Houston’s approval. Houston refused and was among
several parties who contested the application in an administrative proceeding. Houston and the
Authority executed a settlement agreement in 2014 calling for Houston to withdraw its contest in
25
return for a share of the additional appropriation. The Settlement Agreement further provided
that “[a]fter the Authority obtains a final and non-appealable Permit, Houston and the Authority
shall enter into one or more subsequent Agreements . . . to provide for the implementation in
detail of the terms generally contemplated by this Agreement” and the Interlocal Agreement,
including “the development and design, construction, operation, and maintenance” of the
proposed reservoir. The Commission issued System Operations Permit No. 5851 to the
Authority in 2016, but it did not become final and unappealable until 2018. The record contains
no evidence that the negotiations called for in the settlement agreement took place.
In sum, the terms of the permit, the governing statutory provisions, and the
surrounding circumstances all contribute to a reasonable, settled expectation that Houston will
retain its interest in Permit 2925B at least until September 1, 2025. Based on the record before
us, we conclude that Houston’s property interest in Permit 2925B is “settled.”
We now turn to the third Robinson factor, which directs us to consider the extent
of H.B. 2846’s impairment of the settled rights. See Robinson, 335 S.W.3d at 145. Appellants
concede that H.B. 2846 eliminates Houston’s 70% interest in the project but argue that the
impairment is “minimal” because Houston has no need for the water for the next fifty years.
Houston disagrees and cites Haddock’s affidavit regarding the role Houston’s rights in Permit
2925B played in the City’s long-term water plans. Notwithstanding Houston’s relative need for
the water, a water right is valuable in other ways beyond its immediate usefulness. A permanent
water right is an easement that passes with title to the land and may be conveyed as with other
rights in land. See Tex. Water Code § 11.040; Ware, 2017 WL 875307, at *1. Haddock testified
that Houston’s interest in the project constitutes 15% of its total surface water rights and that
Houston relied on the existence of this interest in its long-term water planning. H.B. 2846
26
undeniably eliminates Houston’s 70% interest in the project. The elimination of a right plainly
has a significant impact on that right.16 See Robinson, 335 S.W.3d at 148.
Because the record shows that H.B. 2846 serves a minimal public interest while
having a significant impact on Houston’s well-settled property right, we hold that H.B. 2846 is
unconstitutionally retroactive. See id. at 150. Consequently, the district court did not err in
granting summary judgment to Houston on this ground. Having concluded that H.B. 2846 is
unconstitutionally retroactive, we need not address Houston’s remaining constitutional
challenges to that statute. See Tex. R. App. P. 47.1.
CONCLUSION
We affirm the district court’s judgment.
__________________________________________
Edward Smith, Justice
Before Justices Goodwin, Triana, and Smith
Dissenting Opinion by Justice Goodwin
Affirmed
Filed: June 30, 2021
16
Although H.B. 2846 eliminates Houston’s interest in the project, the impact on
Houston’s obligation to repay the remainder of the loan from the Water Board to purchase the
reservoir site is less clear. Executive Administrator of the Water Board Jeff Walker testified
during the hearings in 2019 that Houston had paid eleven million dollars out of its fourteen-
million-dollar share of the loan.
27